NZD
The Reserve Bank of New Zealand left the official cash rate on hold at 2.5 percent last Thursday and indicated that the current level could be the trough for the interest rate.

The merchandise terms of trade fell 3.0 percent driven by an 8.2 percent fall in export prices.  Export volumes rose 2.0 percent, while import volumes contracted 9.8 percent.  Electronic card transactions for May had a positive result showing retail spending rose 0.7 percent, while core spending rose 1.6 percent.

Also out locally last week in seasonally adjusted terms house sales fell 13.3 percent in May, following a 22.6 percent surge in April.  Days to sell continued to fall, with the median at 41 days.

Turning to the events this week, there is not a lot to discuss in terms of local data.  Internationally, the main releases will be the meeting minutes from the RBA, BoE and BoJ.  All these central banks left their respective policy rates unchanged, and so the focus will be on how close those decisions were.

AUD
Australia’s unemployment rate rose to an as-expected seasonally adjusted 5.7 percent in May from 5.5 percent in April.  The number of people in full-time work fell 26,200 in May, while the number of people in part-time work rose by 24,500.

The number of housing-finance approvals in Australia rose a seasonally adjusted 0.9 percent in April from March.  In a breakdown of the data, the bureau said the number of finance approvals to build houses rose a seasonally adjusted 1.3 percent in April from March and the number of approvals to buy newly built houses fell 0.5 percent.

The week ahead:
NZD
Monday 15th – Economic survey of Manufacturing (Q1) – qoq
Tuesday 16th – Non Resident Bond Holding (May)

AUD
Tuesday 16th – RBA’s Board June Minutes
Wednesday 17th – Westpac Leading Index (Apr) mom, Dwelling Starts (Q1)

GBPNZD
Leading up to the interest rate decision here on Thursday in New Zealand, Sterling rallied against the NZD above the 2.61 level for a brief amount of time.  After the decision was announced that the Reserve Bank of New Zealand had decide to keep interest rates on hold for the time being Sterling lost a couple of cents, dropping  into the 2.57’s where it spent the remainder of the week.

Out in the UK last week the DCLG house price results for April showed a year on year decline of -13.0 percent, marginally better that the previous result of -13.6 percent.  Industrial production was out strong in UK, and was the first time it has risen in consecutive months since February 2008.

With more on offer in the data front in the UK this week we could see another rally from the Sterling camp with a surge in the rate towards the 2.60 level.

The week ahead in the UK:
Tuesday 16th – CPI (May) – mom
Wednesday 17th – BoE Minutes, Claimant Count Rate (May), Jobless Claims Change (May), ILO Unemployment Rate (Apr)
Thursday 18th – Retail Sales (May) mom, Public Sector Net Borrowing (May)

GBPAUD
This pairing was lacking in major movements last week.  The rate hovered between the GBPAUD 2.02 – 2.04 level and closed on Friday where it had begun the week just above the GBPAUD 2.02 level.

This could be Sterling’s week to gain back some ground on the Australian Dollar, eyes will be on the Bank of England Minutes released on Wednesday for any signs of an economy finding its feet.   For data out in the UK this week please refer to GBPNZD above.

EURNZD
A dismal result from the German economy hurt the Euro last week as exports fell by 4.8 percent on a month on moth figure and is lower by 28.7 percent since this time last year; the steepest fall since records began in 1950. 

Other data from the EU painted an equally gloomy picture of the current situation with confidence levels still low and house prices down, the Euro took a dive against the New Zealand Dollar last week.  The EURNZD slid from the high of the week on Monday EURNZD 2.2525 to the low of 2.1812 after the interest rate was kept on hold in New Zealand. 

This week the ball is in the Euro zones court, data out this week could point to areas of stabilization in areas of economic sentiment and we could see the Euro push back above the EURNZD 2.20 level.

The week ahead for the Euro zone:
Monday 15th – Employment (Q1) qoq
Tuesday 16th – CPI (May) mom/yoy, ZEW Economic Sentiment (Jun)
Wednesday 17th – Trade balance (Apr), Construction Output Rate (Apr)
Friday 19th – German Producer Prices (May) mom

EURAUD
As with the EURNZD rate the Euro could didn’t manage to hold its ground against the Australian Dollar last week.
The Euro lost 4 cents on the AUD falling away from the peak on Monday of EURAUD 1.7679 to the low of last week on Thursday of EURAUD 1.7158.  Modest gains could come from the Euro this week with the rate perhaps venturing back towards the 1.74 level.  For data out in the Euro zone this week please refer to EURNZD above.

NZDUSD
The market oscillated between NZDUSD 0.6150 and 0.6350 prior to the interest rate decision in New Zealand last Thursday.  A no change decision from the reserve Bank of New Zealand coupled with an accompanying statement that was perceived as less dovish gave the NZD a boost for the remainder of the week.

This week could bring the rate back down a fraction with data out second tier in nature out in New Zealand and poor results expected in the data out in the US, a drop in the rate towards the lower NZDUSD 0.62 level might be on the cards.

The week ahead in the US:
Tuesday 16th – NAHB Housing Market Index (Jun), Empire Manufacturing (Jun)
Wednesday 17th – PPI (May) mom, Housing Starts (May), Building Permits (May)
Thursday 18th – Consumer price Index (May) mom, Current Account Balance (Q1)
Friday 19th – Initial Jobless claims (w/e Jun 14th)

AUDUSD
The Australian Dollar spent the majority of the week making gains on the USD.  The commodity currency boosted from the low of the week on Monday of AUDUSD 0.785 to the high on Thursday just above the 0.82 level.  From there the rate corrected and fell slightly in the USD’s favour to 0.8104 on Friday.

The USD is having a hard time of things lately with the majority of its pairings and with an array of data out this week we could see a little more vulnerability for the American camp.   For data out in the US this week please refer to NZDUSD above.

AUDNZD
The New Zealand Dollar gained on a fading greenback last week but slipped to its lowest level in three weeks against the Australian Dollar last Wednesday, the rate climbing to AUDNZD 1.2845.  Making the kiwi less attractive is the fact that New Zealand interest rates are now lower than Australia’s for the first time in a long time. 

This week attention will be on the Meeting Minutes out from the Reserve Bank of Australia’s June meeting out on Tuesday and if to see if there is any indication on how long the RBA intends to keep the rate on hold. 

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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.