Weak Chinese Industrial Production data added to the ‘risk-off’ trading environment during last Friday’s Asian session.
Foreign Currency Market Update – GBP / NZD Update
The Pound has been in bullish mood against the New Zealand Dollar since the middle part of April and the GBP NZD exchange rate continued in its uptrend during last week’s session. Even a relative paucity of data releases in New Zealand and the UK couldn’t hold back the pair, adding to the feeling that the planets are transpiring against the Kiwi currency.
The NZD remains highly sensitive to risk due to New Zealand’s relatively high interest rates and the domestic economy’s dependence on trading revenues accrued from exports of its abundant raw materials. This means that the ongoing debt crisis in the eurozone has spelt bad news for the Kiwi. Greece’s situation appears to be deteriorating on a near-daily basis, with the formation of an ‘anti-bailout’ coalition looking likely in the middle part of last week. Fears of a Greek exit from the euro have increased during today’s session, following an announcement by the Democratic Left party earlier today that it would not countenance taking part in a future coalition government unless the staunchly anti-bailout left wing Syriza bloc was also a part of it. It looks increasingly unlikely that a coalition will be formed ahead of Thursday’s deadline, so a fresh Greek general election next month looks the most likely outcome. The Syriza bloc are faring strongly in current opinion polls, suggesting that a Greek euro-exit could be on the cards. The threat of such a scenario has hit global equities markets and the NZD equally hard in early trading this week.
Weak Chinese Industrial Production data added to the ‘risk-off’ trading environment during last Friday’s Asian session, heaping further pressure on the Kiwi, sending the GBP NZD exchange rate to 2.0620, its highest level since mid-December. The pair has already eclipsed this rate in early trading this week, following the release of disappointing New Zealand retail sales numbers last night and ongoing Greek debt fears. If GBP NZD maintains its upward momentum, then a run at last November’s 13-month high of 2.1050 looks possible. However, the pair has come a long way in a very short space of time, having traded below 2:1 as recently as 2nd May. For this reason, a technical move lower can not be ruled out in the near-term.
Summary of major upcoming data releases that we think may move the market.
- Pound to New Zealand Dollar Exchange Rate Forecast: Weaker than anticipated New Zealand labour market figures, released in the middle part of last week’s session, caused pronounced selling pressure on the Kiwi Dollar.
- Pound to South African Rand Exchange Rate Forecast – The South African Rand began last week’s session in go-ahead mood
- Pound to New Zealand Dollar Exchange Rate Forecast – The Pound struggled to assert itself against a resilient New Zealand Dollar
- Pound to New Zealand Dollar Exchange Rate Forecast – Sterling has continued its march forward against the Kiwi Dollar in recent sessions
- Pound to New Zealand Dollar Exchange Rate Forecast – Price action for GBP NZD during last week’s session was dictated by two data releases on opposite sides of the world