Written by John Cameron on March 26th, 2012
The Kiwi Dollar recovered its poise toward the end of last week, as global share markets once again improved.
Foreign Currency Market Update – GBP / NZD Update
The GBP NZD exchange rate jumped to 1.9673 during last week’s session; this was the pair’s highest level since the second week of 2012. The forward move was driven by a weakening of the Kiwi Dollar, following the release of data which suggested that levels of economic activity are slowing in the Pacific country. Wednesday night’s domestic GDP Growth numbers showed that New Zealand’s economy had expanded by only 0.3% in the final three months of 2011 – significantly down from the 0.7% growth which New Zealand enjoyed in the third quarter of last year. Analysts had been expecting only a slight drop off, so the 0.3% print came a shock to market participants, causing them to factor-in an increased chance that the Reserve Bank of New Zealand will once again cut interest rates later in the year, in an attempt to stimulate the kiwi economy.
The early hours of Thursday morning brought further bad news for the risk-sensitive New Zealand Dollar, with the release of Chinese economic data which showed that, for the fifth month in succession, activity levels had dropped in China’s massive manufacturing sector. This was the latest in a line of worryingly weak data sets from the mammoth Asian economy and it hit the high risk/high reward New Zealand Dollar harder than almost any other currency.
The release of the minutes of the March Bank of England monetary policy committee meeting on Wednesday morning caused further upward movement for the GBP NZD exchange rate, revealing that only two of the nine-man committee had voted for an extension to the Bank’s ongoing Quantitative Easing programme.
The Kiwi Dollar recovered its poise toward the end of last week, as global share markets once again improved. This move has continued into this week’s session, suggesting that last week’s spike higher for GBP NZD was an ‘outlier’. If investor sentiment continues to pick up and the NZD strengthens further, then last month’s six month low of 1.8634 could become a near-term target for the pair. Consecutive closes below this level would send out a strong negative signal moving forward.
Summary of major upcoming data releases that we think may move the market.
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – Kiwi surges 8% in four weeks
- Pound to South African Rand Exchange Rate Forecast – The Rand is moving forward once again at the start of this week’s session
- Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast
- The GBP CAD exchange rate steadily lost ground throughout last week’s session
- Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast – Kiwi stabilises as stock markets rebound…