Strong GBP, USD Keep New Zealand Dollar Exchange Rates From Advancing on Potential Dairy Price Uptick
NZD Continues Rise Thanks to Uncertain US Dollar
Following mixed data which saw Durable Goods Orders rise and the University of Michigan Confidence index fall, the US Dollar has been trending uncertainly, allowing the NZD exchange rates to appreciate.
The New Zealand Dollar has also been bolstered by news of record immigration, with more people coming to New Zealand from Australia than leaving since 1991, suggesting an underlying strength in the economy.
NZD-GBP conversion rate is up 0.4%, while NZD-USD exchange rate is up 0.2%.
New Zealand Dollar Extends Gains Against US Dollar to 0.3%
A fall in US economic confidence has caused the US Dollar gains against the major currencies to slow, allowing the New Zealand Dollar to extend its lead to trend around 0.6571.
The University of Michigan Confidence Survey, which measures the outlook on business conditions, personal finances and purchasing power, posted a larger-than-expected fall from 93.1 to 91.3.
The US Dollar continues to fall against the New Zealand Dollar, although positive PMIs and today’s earlier data have seen the ‘Buck’ (USD) rise against most currencies, even if the majority of gains have been modest.
After three consecutive drops in dairy prices the New Zealand Dollar (NZD) has strengthened 0.5% against the Euro (EUR), although a strong Pound Sterling (GBP) and US Dollar (USD) have prevented the ‘Kiwi’ from making gains.
A rise in dairy futures suggests that prices will increase, having found a base after the GlobalDairyTrade price index fell 7.9% at the last auction on the 17th of November.
Trader confidence in the ‘Kiwi’ grew after suggestions that the price of dairy goods – New Zealand’s largest export – could rise, which may save the Reserve Bank of New Zealand (RBNZ) from having to cut interest rates in order to stimulate the economy.
A quick foreign exchange market summary before we bring you the rest of the report:
New Zealand desperately needs a price increase - with a large percentage of the country’s dairy farmers already struggling with bad debts, the RBNZ sees problems in the industry becoming:
‘exacerbated if low dairy prices are sustained or dairy farm prices fall significantly’
Pound Sterling Strong Today as Osbourne Reveals Optimistic Growth Figures
While Pound Sterling softened ahead of today’s Autumn Statement, George Osbourne revealed that the Office for Budget Responsibility (OBR) has revised its 2016/17 growth figures upwards.
The OBR, which has increased both the 2016 and 2017 growth forecast up 0.1%, predicts sturdy growth from the UK economy.
The Chancellor has also committed to spending more on education, the science budget and capital funding of transport projects.
Currency Market Update: US Dollar Rises Despite Mixed US Data
The US Dollar was sluggish this morning as traders paused before the data glut which started this afternoon.
Some of the data has disappointed, however, with Personal Consumption Expenditure Core remaining level at 1.3%, jobless Continuing Claims defying forecasts of a fall to rise to 2207k and Personal Spending in October continuing at 0.1%.
There was some positive news, such as a 3.0% increase in Durable Goods Orders and a drop of 12k in the number of Initial Jobless Claims, which has allowed the US Dollar to edge up 0.1% against the New Zealand Dollar.
Australian Dollar Declines in the Face of Bullish US Dollar
After making strong gains over the past few days, the Australian Dollar has seen its progress halted by a strengthening US Dollar and as a result has softened against all the major currencies other than the floundering Euro (EUR).
Falling commodity prices have so far failed to have much of an impact on the ‘Aussie’ in the face of confident claims by the Reserve Bank of Australia (RBA) on the state of the economy and growth data which shows the Australian economy is gradually moving away from relying on mineral trade.
The Australian Dollar is currently down -0.3% against the New Zealand Dollar, Pound Sterling and the US Dollar.
New Zealand Dollar Forecast: Fourth Rate Cut this Year Likely
The New Zealand Dollar has been kept weak by the prospect of a further rate cut, which would see the official cash rate drop from 2.75%.
The RBNZ also has to control the inflating housing market, with Auckland now one of the world’s most expensive cities thanks to house prices reach nine times the annual income of its residents.
The New Zealand Balance and Trade Balance figures are due out during today’s Australian session.