NZ/Aus/S. Africa - Weekly Update - Written by giles on Monday, May 11, 2009 2:58 - 0 Comments
World First NZD/AUD Weekly Update - 11th May
NZD
The labour market data out last week was not as bad as feared. While unemployment tumbled 1.1 percent in Q1, the unemployment rate ‘only’ rose to 5.0 percent as a number of workers leaving the labour force limited its rise. Compared with the deterioration in labour markets around the globe, New Zealand’s labour market remains relatively resilient, although it may also be a case of pending catch-up to come.
In the March Labour Cost Index quality adjusted private sector ordinary time wages rose 0.5 percent, taking annual growth to 3.0 percent.
Recent data continues to point to stabilisation and the so-called ‘green shoots’. Global equity markets have continued their march higher, risk appetites look to be mending and economic data is finding a base, or at least pointing to slower rates of contraction particularly in the US. Data out this week is likely to provide further evidence of stabilization.
AUD
Last week the Reserve Bank of Australia decided to leave its policy rate unchanged at its May Board meeting, having cut by 25 basis points at its April meeting to 3 percent. The tone of the whole statement was more positive than the statement released in April and which could suggest a pause ahead with no cut in June looking to be on the cards.
Building approvals bounced in March, dwelling approvals rose 3.5 percent on a seasonally adjusted basis in March with 2.8 percent rise in both the number of private house and private other (medium/high density) approvals. Employment data in Australia was impressive with employment rising 27,300 in April, the unemployment rate dropped from 5.7 percent to 5.4 percent and full-time employment rose 49,100.
On another positive note retail sales grew a much stronger than expected 2.2 percent in the month of March and follows up the trend seen in previous three months when sales were boosted by the Rudd stimulus dollars paid in December.
The week ahead:
NZD
Monday 11th – Electronic Card Spending (Apr) mom
Tuesday 12th – Food Prices (Apr) mom
Wednesday 13th – RBNZ Financial Stability Report
Friday 15th – Retail Sales (Mar) mom
AUD
Monday 11th – NAB Business Confidence (Apr)
Tuesday 12th – Home Loans (Mar), Investment Lending (Mar) mom
Wednesday 13th – Westpac Consumer Confidence (May)
Thursday 14th – Consumer Inflation Expectation (May)
GBPNZD
The Bank of England’s interest rate decision went as expected last week with the rate being held at 0.50 percent. A slight surprise came with the quantitative easing figure in the UK which for now sits at £125bn, this saw Sterling fall against the New Zealand Dollar last week.
The rate commenced trading on Monday just above the GBPNZD 2.60 level, this was short lived as thereafter Sterling fell and the pairing dipped into the GBPNZD 2.52’s on Friday. This week we could see the rate continue in the direction it has been heading of late and that is south for Sterling, in saying that the 2.50 level should prove a strong resistance level.
The week ahead in the UK:
Tuesday 12th – RICS House Price balance (Apr), Industrial Production (Mar) mom
Wednesday 13th – ILO Unemployment Rate (3 mths Mar), BoE Releases Quarterly Inflation Report
GBPAUD
The Australian Dollar was boosted by a plethora of economic reports suggesting that the global recession is abating down under. The positive figures out in retail spending and unemployment figures in Australia last week message seems to be that the recession is not a deep one and certainly milder than those in the major economies.
Sterling took a fall in this pairing last week and the rate slid below the GBPAUD 2.00 level for the first time since 1996. With the state of the economy appearing a lot brighter in Australia as opposed to the current climate in the UK it could be some time before we see any great movements coming from Sterling. For data out in the UK this week please refer to GBPNZD above.
EURNZD
Out in the Euro zone last week the ECB cut rates by 25 basis points bringing down the rate to 1.00 percent, which takes it to the lowest level it has been since the Euro was launched. In other news retail sales in the Euro zone came out weaker than expected at -0.6 percent for March.
At opening on Monday the rate was at 2.3187 it then climbed above the 2.32 level briefly before moving south to close on Friday at 2.2525.
The week ahead in the Euro zone:
Tuesday 12th – Germany Consumer Price Index (Apr) mom
Wednesday 13th – Industrial Production (Mar) mom
Friday 15th – CPI (Apr) mom, GDP (Q1) qoq
EURAUD
With stronger than expected data results out in Australia last week and a 25 basis point cut from the ECB last week the EURAUD fell to an eight month low, breaking below the 1.76 level for a short period on Thursday last week.
With risk aversion levels stabilising globally and an appetite returning for global growth sensitive currencies such as the AUD and NZD the EURAUD could test and remain at these lower levels for the time being. For data out in the Euro zone this week please refer to EURNZD above.
NZDUSD
The USD seems firmly placed on the back foot at present, with the US focused on internal issues a lower USD is in their interest. If the equities can hold gains the kiwi looks set to stay in the recent higher range of 0.58 – 0.60 level, however haven’t written off the NZD encountering headwinds from the USD anytime soon.
The week ahead in the US:
Wednesday 13th – Trade balance (Mar)
Thursday 14th – Import Price Index (Apr) mom, Advance Retail Sales (Apr) mom
Friday 15th – Producer Price Index (Apr) mom
AUDUSD
The Australian Dollar traded up to a 7 month high this week to over AUDUSD 0.76, with the Australian Dollar having risen by about 20 percent against the USD since early March. The Australian Dollar could struggle to gain from this point, it would require significant signs of global growth to do so and with that in mind we might expect to see the AUDUSD rate to remain in a 0.74 – 0.77 band for the short term.
AUDNZD
Employment data in Australia was impressive and New Zealand’s was not as bad as feared, these results ensured little movement in the AUDNZD last week. The rate continued trading in the tight band of 1.27 – 1.28 last week, again little movement expected from either side this week.
Going forward this week local data in New Zealand includes housing market and retail sales, which are expected to show signs of stabilisation
________________________________________________________________________________
Please feel free to contact me (renee.doughty@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.
Leave a Reply