In the immediate aftermath of Crimea’s referendum, which saw the region vote to rejoin Russia, a surge of risk aversion caused higher-yielding currencies like the New Zealand Dollar to fall.
The ‘Kiwi’ softened against the majority of its rivals as investors turned to the safe haven US Dollar and Japanese Yen amid fears that the situation could escalate.
In the view of one BNZ strategist; ‘The Japanese Yen has continued to benefit from a safe-haven bid. The New Zealand Dollar will start the week with a negative bias, as results from Crimea’s weekend referendum the international response emerge.’
However, during Australasian trading the ‘Kiwi’ was able to recover losses against the Pound thanks to upbeat domestic data.
New Zealand’s Westpac consumer confidence measure achieved 121.7 in the first quarter of 2014, up from a positively revised 120.1 in the fourth quarter of 2013.
The reading was the strongest for nine years.
The data showed that over a third of those surveyed expect the nation’s economy to strengthen over the next twelve months.
In a statement issued with the figures Westpac economist Felix Delbruck observed; ‘Consumers’ economic optimism, their assessment of their financial situation and their reported attitudes to spending have all continued to pick up. Their attitudes towards their own finances and towards spending remain relatively cautious. We continue to be of the view that in the next couple of years, consumer spending will be a passenger as other sectors of the economy sit in the driver’s seat.’
The present conditions index advanced from 113.1 to 115.5 between the fourth and first quarters.
However, optimism for the next five years dipped slightly.
A separate report showed that New Zealand’s performance of services index fell from a negatively revised 57.8 in January to 53.1 in February.
The measure remains above the 50 mark separating growth from contraction.
In the opinion of some industry experts this decline is merely a revision following a very strong result in January and is no cause for alarm.
Business New Zealand chief executive Phil O’Reilly commented; ‘What we saw in February was a slight moderation on the Performance of Services index post a very, very strong January. What we’re seeing here is a little bit of lumpiness around the numbers for the PSI. I’m not concerned about that but certainly new orders took a bit of a dive this month.’
New orders fell 10.7 points in February.
The New Zealand Dollar was able to close local trading in a stronger position against the Pound and largely held gains into European trading.
The GBP/NZD pairing was little changed following the publication of UK Rightmove housing data.
The report showed that asking prices for London properties hit a record level in March.
On a national basis property values were up 1.6 per cent, taking the average asking price to a record of 255,962 Pounds.
A lack of further influential UK economic data is likely to restrain Pound movement for the rest of the day.
While any additional Ukraine developments will be of interest, economists will also be looking ahead to this week’s UK employment/trade balance figures and New Zealand’s growth report.
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,0.8545,
New Zealand Dollar,,Euro,0.6156,
New Zealand Dollar,,Australian Dollar,0.9476 ,
New Zealand Dollar,,Pound Sterling,0.5139,
US Dollar,,New Zealand Dollar,1.1715 ,
Euro,,New Zealand Dollar,1.6249 ,
Australian Dollar,,New Zealand Dollar,1.0601 ,
Pound Sterling,,New Zealand Dollar, 1.9437,
[/table]
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