The New Zealand Dollar (NZD) struggled against both the Australian Dollar (AUD) and Pound Sterling (GBP) over the course of this week despite a pick-up in dairy prices. However, the NZ currency has since recovered today, with the GBP/NZD exchange rate falling 0.65 per cent.
Low wage growth figures from the US have crushed the odds of a Federal Reserve rate hike and without the subsequent boost to USD as a result, appetite for high-risk currencies like NZD is on the rise.
NZD is currently trending bullishly as investors turn to assets that are likely to provide a stronger return, such as riskier currencies as well as stocks.
NZD Continues Bullish vs GBP on Lack of Risk Sentiment
January’s Australian Trade Balance figures have printed positively, strengthening the AUD to GBP, while a rise in building activity in the final quarter of 2015 is keeping the New Zealand dollar (NZD) strong too.
The Australian trade deficit fell by over -AU$500 million, dropping from -AU$3524 million to -AU$2937 million.
Foreign currency investors have continued to largely shy away from the New Zealand Dollar (NZD) as speculation over the Reserve Bank of New Zealand’s (RBNZ) next interest rate decision weighs on market sentiment.
Although the latest Chinese Manufacturing PMI proved worse than anticipated on Tuesday, slipping further into contraction territory, the hopes of additional economic stimulus measures from the People’s Bank of China (PBoC) prompted a consequent boost in risk sentiment.
However, as the fourth quarter New Zealand Terms of Trade failed to improve as forecast the resultant surge of commodity-currency support saw the New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate enter a renewed slump.
Before we continue with the news, here are today’s fx rates for your reference:
On Tuesday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
Today finds the pound to pound spot exchange rate priced at 1.
The live inter-bank GBP-AUD spot rate is quoted as 1.919 today.
Today finds the pound to us dollar spot exchange rate priced at 1.245.
Please note: the FX rates above, updated 23rd Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
Despite the latest GlobalDairyTrade auction showing the first increase in dairy prices since the end of 2015 this failed to particularly shore up the softened New Zealand Dollar.
This more limited reaction seemed to be due to markets having already priced in a modest improvement in the price of milk solids, as researchers at BNZ noted:
’This was in line with expectations, but it looks like some anticipated a larger recovery, with the NZD dipping 30-40 pips on the news, albeit that proved to be temporary.’
Confidence in the outlook of the New Zealand economy appears to remain generally muted, though, particularly as US data shows fresh signs of strength and encourages the likelihood of the Fed returning to a tightening bias in the nearer future.
Pound Sterling Makes Gains despite Disappointing Construction PMI
Pound Sterling (GBP) has continued to recover lost ground on Wednesday in spite of the UK Construction PMI showing fresh signs of weakness within the domestic economy, slipping from 55.0 to 54.2 in February.
This does not appear to bode well for Thursday’s Services PMI, however, with any slowing in the service sector expected to have a far more detrimental impact on both the UK’s first quarter GDP and the Pound.
Nevertheless, as ‘Brexit’ volatility recedes and investors buy back into the weakened currency the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has been making strong gains in the early week.
Strong Australian GDP Boosts Australian Dollar to New Zealand Dollar Exchange Rate
Demand for the Australian Dollar (AUD) has surged further on Wednesday following an unexpectedly improved fourth quarter Australian GDP.
Reinforcing the Reserve Bank of Australia’s (RBA) decision to leave interest rates on hold the domestic economy grew by 3.0% on the year, suggesting that slowdown concerns and negative global headwinds failed to drag as heavily on growth as anticipated.
Should the January Trade Balance demonstrate the expected narrowing in the trade deficit the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is likely to extend its present uptrend.