New Zealand Dollar To US Dollar (NZD/USD) Exchange Rate On 'Bull Run' Despite Dovish RBNZ Outlook

Published: 20 Oct 2017 21:24 Currency Markets Ecomomy News Forex

New zealand dollar to pound exchange rate forecast

According to Citibank analysts, interest rate futures showed a 50% chance that the Reserve Bank of New Zealand (RBNZ) would cut the overnight cash rate last night. We examine the short, medium and long term New Zealand dollar exchange rate forecasts.

The NZ dollar exchange rates have been on a bull run today, thanks to the pair of central bank interest rate freezes.

However, the incoming New Zealand building permits and NBNZ business confidence results for March and April may not provide the require impetus for this advantageous state to last.

The New Zealand dollar exchange rates found strength overnight despite the RBNZ leaving the cash rate on hold and delivering a dovish statement.

The NZD/USD exchange rate rallied over 100 pips and has continued to climb into Thursday's session on the foreign exchange investors.

Low liquidity is one explanation for this sudden rise in the NZ dollar.

Foreign exchange markets were in a state of relief after the Reserve Bank of New Zealand (RBNZ) opted not to cut interest rates at this juncture, particularly as the Federal Open Market Committee (FOMC) also declined to hike rates overnight.

As the NZ Dollar exchange rates had been heavily sold ahead of the policy meeting on worries of an imminent rate cut the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate remained in a downtrend.

Latest New Zealand/Australian Dollar Exchange Rates

On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1

The GBP to GBP exchange rate converts at 1 today.

At time of writing the pound to us dollar exchange rate is quoted at 1.264.

Today finds the pound to australian dollar spot exchange rate priced at 1.937.

NB: the forex rates mentioned above, revised as of 29th Mar 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.

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Confidence in the outlook of the NZ economy was dampened by the revelation that the country’s trade surplus had narrowed substantially in March, sending the GBP to NZD exchange rate higher.

This latest piece of weak domestic data further increased speculation that the Reserve Bank of New Zealand (RBNZ) will cut interest rates in the near future, diminishing the appeal of the New Zealand Dollar exchange rates (NZD).

With traders looking ahead to the RBNZ interest rate decision, New Zealand Dollar exchange rates cooled.

This is due to high expectations of a rate cut amid concerns of significant NZD exchange rate overvaluation.

If the RBNZ avoid cutting rates, however, the New Zealand Dollar is likely to rally significantly versus its most traded currency rivals.

New Zealand Dollar (NZD) Exchange Rates Fall Sharply on Market Sentiment

On Wednesday the NZD exchange rates declined heavily versus most of its major peers thanks to dampened market sentiment.

Aiding the depreciation has been mounting expectations of a rate cut from the RBNZ. However, Citibank predict marked NZD gains if the central bank avoids cutting rates, stating:

‘The New Zealand economy continues to grow at a moderate rate, with Citi forecasting GDP growth of 2.7% for 2016, driven by strong momentum in immigration, tourism and construction. Besides, there are financial stability issues when lowering the OCR, namely the increasing household leverage and the booming regional housing markets. Interest rate futures showed a near 50% rate cut probability of this week’s RBNZ meeting. A no cut scenario may help the kiwi to rally. Even a surprise cut may provide buy-on-dip opportunities amid rising risk appetite and USD weakness. According to the futures market, NZD’s non-commercial net long positions increased to 5351 contracts last week, a four consecutive week increase.’
new zealand dollar to australian dollar exchange rate chart

UK Pound Sterling (GBP) Exchange Rates Continue to Climb despite Mixed GDP Data

Over the past few weeks the UK Pound outperformed all of its closes rivals. The appreciation is the result of a relief rally as ‘Brexit’ concerns ease in line with favourable opinion polls.

On Wednesday the UK Pound edged higher versus a number of its peers despite registering mixed results from Gross Domestic Product data.

On the year, first-quarter GDP bettered the median market forecast 2.0% growth with the result actually reaching 2.1%. However, the quarterly reading met with expectations of a slowdown to 0.4% growth. This was due to weak construction and manufacturing output.

Australian Dollar (AUD) Exchange Rates Dive following Weak Domestic Data

In response to a combination of weak domestic data and damp market sentiment, the Australian Dollar declined versus many of its major peers.

Compounding the downtrend was disappointing domestic data results.

Of particular significance, in terms of its detriment to demand for the ‘Aussie’ (AUD), was the first-quarter Consumer Price Index. On the year, inflation was expected to hold at 1.7%, but the result actually dropped to 1.3%. On the quarter, inflation unexpectedly dropped into negative territory.

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