NZ/Aus/S. Africa - Weekly Update - Written by giles on Monday, August 3, 2009 6:34 - 0 Comments
World First NZD/AUD Weekly Update - 03rd August 2009
NZD
Last week was an OCR decision week for the RBNZ and while they acted as everyone expected and left the OCR unchanged at 2.5% the commentary that accompanied that meeting highlighted their stance on the NZD; should financial conditions not ease further (ie the NZ dollar) then the bank may need to ‘reassess policy settings’. This may well mean there will be further cuts to the OCR in the coming months as a tool to diminish some of the NZ dollar’s strength, however this is by no means a full gone conclusion.
The main NZ data in the week ahead is Tuesdays and Thursday’s labour market data which is predicted unsurprisingly to come out weaker than prior quarters.
AUD
In the week ahead in Australia the RBA take centre stage with their rate decision (Tuesday) and on a similarly important note the July labour market data is released on Thursday. While the RBA’s expected non movement on the interest rate should support the Aussie dollar the employment data will be the currencies biggest hurdle over the coming days.
The week ahead:
NZD
Tuesday 4th – Private Wages (2Q), Average Earnings (2Q), ANZ Commodity Price (MoM – July)
Thursday 6th – Unemployment Rate (2Q), Employment Change (2Q)
AUD
Monday 3rd – AiG Performance of Manufacturing Index (July), ANZ Job Advertisements (July), RBA Commodity Index (YoY July)
Tuesday 4th – House Price Index (2Q), Retail Sales (June), RBA Cash Rate Announcement.
Wednesday 5th – AiG Performance of Service Index (July), Trade Balance (June)
Thursday 6th – Employment Change (July), Unemployment Rate (July)
Friday 7th – AiG Performance of Construction Index (July), RBA Quarterly Monetary Policy Statement.
GBPNZD
Sterling managed to make some small gains against the NZD last week. At the outset of the week GBPNZD started at 2.50, dropped a little midweek into the high 2.48’s but regained the lost ground to finish the week back above 2.5 at 2.523.
The key event in the UK this week is the BoE rate decision on Thursday, although no change to the interest rate is expected.
We forecast the GBPNZD rate to remain in the 2.5 – 2.6 range in the short term but break higher as and when the RBNZ act on their desire to have a weaker NZ dollar.
The week ahead in the UK:
Monday 3rd – PMI Manufacturing (July)
Tuesday 4th – PMI Construction (July)
Wednesday 5th – Nationwide Consumer Confidence (July), PMI Services (July), Industrial Production (June)
Thursday 6th – BoE Interest Rate Announcement
Friday 7th – PPI Input and Output (July)
GBPAUD
Sterling continues to struggle to make any ground against the AUD and last week was no exception. The beginning of the week saw the rate at 2.0024 from where it dropped to the low for the week midweek at 1.9854 before climbing back to settle around the 2.0 mark for Thursday and Friday.
Both the RBA and the BoE meet this week to decide on their respective interest rates. Neither party is expected to make a change however the RBA will likely be the more positive in their outlook. A continuation of the GBPAUD 1.98 – 2.04 band is expected.
For data out in the UK please refer to GBPNZD above.
EURNZD
Last week wasn’t a strong one data wise for the Euro so unsurprisingly further ground was lost to the kiwi dollar. Having started the week at 2.1672 the pair dropped in the NZD’s favour to trade for the remainder of the week in the 2.14 – 2.16 band (finishing the week at 2.1517).
The ECB meet on Thursday to decide on the Eurozone’s interest rate and a non move is expected. What will have greater impact as far as the Euro is concerned is Trichet’s comments post meeting. Last month, the press conference gave a hint at a possible lowering of the Eurozone’s benchmark rate over the coming months, however it was characteristically non committal – therefore it will be interesting to see if this has moved more to the fore for the Eurozone or if they will allude and hint once again.
The week ahead in the Euro zone:
Monday 3rd – PMI Manufacturing (Eurozone and Germany – July)
Tuesday 4th – PPI (June)
Wednesday 5th – PMI Services (Eurozone and Germany – July), Retails Sales (June)
Thursday 6th – ECB Announces Interest Rates, Trichet speaks at ECB News Conference
Friday 7th – Trade Balance (Germany – June), Imports and Exports (Germany - June), Industrial Production (Germany - June)
EURAUD
Last week definitely went the Aussie dollars way in this pairing having started the week at EURAUD 1.7355 and dropping to 1.7042 by Friday.
With a relatively packed calendar in the Eurozone over the coming week, including the ECB’s interest rate decision we feel the Euro has more to lose than gain given last week’s negative figures for employment (jobless at a 10 year high) and inflation (lowest inflation rate for the countries sharing the Euro in more than 50 years). Therefore we expect the EURAUD to test the 1.70 level and break lower.
For data out in the Euro zone please refer to EURNZD above.
NZDUSD
The recent gains against the USD made by the kiwi dollar continued last week although there was some midweek profit taking on Wednesday which saw a momentary intraday decline in the rate. Starting the week at 0.6570 the rate climbed to 0.6620 on Tuesday before dropping down on Wednesday to 0.6485. However the remainder of the week belonged again to NZD and by Friday NZDUSD was back above 0.66.
The US dollar continued to be buffeted by risk investor’s putting funds offshore last week and it looks like we may be waiting a little longer to see the USD rebound in the way that many economists think it will. The US dollar weakness comes at a time when US domestic data has show signs of improvement; however investors have used this as a catalyst to reinvest their US dollars in more ‘risky’ territory such as the commodity currencies. In the short term we expect the NZD to continue to break higher and test the 0.68 to 0.70 range.
The week ahead in the US:
Monday 3rd – ISM Manufacturing (July), ISM Prices (July), Construction Spending (June)
Tuesday 4th – Personal Income (June), Pending Homes Sales (June)
Wednesday 5th – ADP Employment Change (July), Factory Orders (June)
Thursday 6th – Initial Jobless Claims (w/e Aug 2nd)
Friday 7th – Non Farm Payrolls (July), Unemployment Rate (July), Consumer Credit (June)
AUDUSD
The Aussie dollar made further gains against the US dollar last week pushing up from 0.8211 at the outset to close at 0.8370 on Friday.
We expect further gains to be made for the Aussie dollar in the short term as we predict commodity currencies to continue to be bought this week in favour of safe haven areas such as the US dollar. However economists still expect a USD rebound in the weeks ahead.
For data out in the US please refer to NZDUSD above.
AUDNZD
Last week saw this pairing move in the Aussie dollars favour with a 1% move up – starting the week at 1.2495 and finishing at 1.2621. This pair continues to trade in a reasonable tight band (1.234 – 1.28) however the upper end is likely to be tested as the RBNZ look to act on the ‘strong’ NZD.
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Please feel free to contact me (giles.smallwood@worldfirst…com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar.
If you would like to discuss your foreign exchange requirements then please don’t hesitate to call our Southern Hemisphere Office on our New Zealand Free phone number 0800 666114 , or Australian Free phone number 1800 701540.
Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.
Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.
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