The New Zealand Dollar was able to achieve a five-month high against the US Dollar in the wake of the Reserve Bank of New Zealand’s decision to introduce an interest rate increase.
The South Pacific asset also surged against peers like the Pound and Euro and has largely held gains as the week draws to a close.
Although Ukraine-inspired risk aversion pushed the ‘Kiwi’ lower against the ‘Greenback’ the New Zealand Dollar’s bullish relationship with the Pound persisted during Australasian trading.
The ‘Kiwi’ was also supported by the news that New Zealand’s performance of manufacturing index came in at 56.2 in February, unchanged from January and above the 50 line separating growth from contraction.
Manufacturing has now expanded for 18 consecutive months.
Production and employment were largely responsible for February’s result.
Of the five sub-indices which make up the gauge, four reported growth.
The employment reading of 54.4 was just shy of 2003’s record reading.
As the result indicates that New Zealand’s economy continues to perform valiantly, it supports the RBNZ decision to raise interest rates by 25 basis points.
The New Zealand Dollar is preparing to post a five-day gain of 0.9 per cent against its US counterpart, but Ukraine developments could cause it to fall.
As Westpac Senior Strategist Imre Speizer notes; ‘The Kiwi will keep going sideways unless we get some more jitters tonight.’
During European trading the Pound fluctuated in response to disappointing UK trade balance data and stronger-than-forecast UK construction output data.
The UK trade deficit widened by more-than-forecast in January as exports fell to a 19-month low.
Meanwhile, UK construction output increased by 1.8 per cent in January and was up 5.4 per cent on the year.
As local trading continued the New Zealand Dollar ticked lower against the Pound and US Dollar but managed to hold gains against the ‘Aussie’.
Next week considerable New Zealand Dollar movement could occur in response to New Zealand’s consumer confidence, performance of services and growth data.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8539,
New Zealand Dollar,,Euro,0.6157,
New Zealand Dollar,,Australian Dollar,0.9476 ,
New Zealand Dollar,,Pound Sterling,0.5137,
US Dollar,,New Zealand Dollar,1.1913 ,
Euro,,New Zealand Dollar,1.6275 ,
Australian Dollar,,New Zealand Dollar,1.0690 ,
Pound Sterling,,New Zealand Dollar, 1.9801,
[/table]
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