NZ/Aus/S. Africa - Weekly Update - Written by renee on Monday, September 15, 2008 3:10 - 0 Comments
World First NZD/AUD Weekly Update - 15th September
NZD
In the apparently poorest financial conditions seen in New Zealand since the 1930’s (noted it is not the worst economic conditions) in a surprise move, the RBNZ cut the OCR by 50bps to 7.50 percent on Thursday of last week. In this environment the RBNZ noted that “we believe it is appropriate to lend more weight to the downside risks associated with the deteriorating global outlook, increased credit pressures, and domestic housing market correction. However, we remain mindful of the risks to inflation.” They believe a 50bp cut is appropriate, as they still don’t expect this to be fully passed on given the backdrop of a challenging credit environment.
Other recent local data released in New Zealand last week. Total building volumes fell 5.8 percent. The terms of trade fell 0.5 percent. Export volumes fell 3.7 percent, while import volumes rose 5.4 percent. REINZ House Sales (August) in seasonally adjusted terms, house sales volumes fell 11 percent and days to sale fell slightly to 56 days. The median house price fell $10,000 to $330,000. Food prices rose 2.7 percent and Retail Sales (July) headline sales fell 0.8 percent, while core sales fell 0.2 percent.
AUD
Last week employment figures released were marginally on the upside in August after rising 14,600 after a (revised) 18,700 increase in July. Both full-time and part-time employment growth rose equally in August. The real surprise was the fall in the unemployment rate to 4.1 percent from 4.3 percent courtesy of a fall in the participation rate to 65.2 percent from 65.3 percent. Consumer sentiment rose in the wake of the RBA interest rate cut. Sentiment rose 7.0 percent in September to an index level of 92.2, around 8 percent below its long term average but now up from its low of 79 reached in July. The further pull-back in world oil prices would have also supported sentiment.
Housing finance approvals still anaemic in July, the headline number of owner occupied loans approved in July was little changed, down 0.2 percent after successive falls since February; this was broadly in line with expectations.
The week ahead:
NZD
Monday 15th – Manufacturing Activity (Q2)
Friday 19th – Visitor Arrivals (Aug), Credit Card Spending (Aug) yoy, Current Account Balance (Q2)
AUD
Tuesday 16th – RBA Board Minutes from September meeting
Wednesday 17th – Preliminary BoP Imports (Aug)
GBPNZD
Last week Sterling made significant gains on the NZD on the back of the Reserve Bank of New Zealand cutting the Official Cash Rate by 50bps as opposed to the 25bp cut that was anticipated. At opening last week the rate was at GBPNZD 2.613 from there the rate traded between the 2.6 – 2.64 range and then spiked on Thursday into the GBPNZD 2.70’s. Sterling held most of its gains to end trading on Friday in the GBPNZD 2.69’s.
PPI and Industrial Production data out last week in the UK were both weaker than expected. However, some good news out in the housing market; fewer surveyors reported falling prices in August compared to July. RICS reported poor sales statistics with the average UK estate agent’s office only selling 1 property a week.
The possible market mover this week could be the Bank of England Minutes with a possible revelation on when they are closer to cutting rates and whether it is in line market consensus that they will by the end of this year.
The week ahead in the UK:
Tuesday 16th – CPI (Aug), DCLG UK House Prices (Jul) yoy
Wednesday 17th – Bank of England Minutes, Jobless Claims Change (Aug)
Thursday 18th – Retail Sales (Aug) mom
GBPAUD
As with the GBPNZD rate last week Sterling came off on top against the Australian Dollar. The week started with the rate at GBPAUD 2.143 to gradually climb and reach the peak of the week on Thursday at GBPAUD 2.21.
This week with data being second tier in nature out in both sides one would expect that Sterling might hold onto its gains and continue to trade within the 2.18 -2.20 band. For data out in the UK this week please refer to GBPNZD above.
EURNZD
With data released being very light in the Euro zone last week the market mover for the rate was once again the Official Cash Rate cut in New Zealand by the Reserve Bank. The rate opened at EURNZD 2.10 on Monday and range traded between 2.10 – 2.12 through to Thursday when it then jumped up to the peak of the week of EURNZD 2.1553, it then retreated back slightly to end close of play in the EURNZD 2.14’s.
Weaker than forecasted results were out in the Euro zone for Sentix Investor Confidence which came in at -20.2 when -18.3 was expected and also Industrial Production for July came in at -0.3 percent down from the -0.2 result in June.
This week we might expect the rate to range trade within the 2.14 – 2.17 band as the EUR will likely hold onto the gains made on the NZD last week.
Data out in the Euro zone this week:
Tuesday 16th – CPI (Aug) mom & yoy, ZEW Survey (Economic Sentiment Sept)
Wednesday 17th – Trade Balance (Jul)
Thursday 18th – Construction Output (Jul)
Friday 19th – ECB’s Stark Speaks in Rome
EURAUD
It was a mixed bag last week for the EURAUD rate. At opening on Monday the rate was at EURAUD 1.73, it then climbed to reach the peak of the week on Tuesday at 1.764 and then fell away gradually to end close of play at EURAUD 1.743.
This week we could see the rate continue in the EURAUD 1.73 -1.76 band as the trend for the past couple of months has been the EUR appreciating against the AUD. For data out in the Euro zone this week please see EURNZD above.
NZDUSD
In the US last week the August payroll figures surprised on the downside with the economy shedding 84k jobs and unemployment climbing from 5.7 percent to 6.1 percent, far above the consensus 5.7 percent. However, in the wake of the announced government take-over of mortgage giants Fannie Mae and Freddie Mac, bank mortgage rates fell off a cliff, a typical 30 year mortgage falling from 6.3 percent to 5.8 percent.
The further turmoil in the US economy did not stop the USD from gaining on the NZD last week. The rate hitting lowest levels seen since November 2006, on Thursday following the Reserve Bank of New Zealand’s interest rate cut the rate hit down in the low NZDUSD 0.65’s. The NZD recovering from the surprise cut slightly on Friday with the rate hovering in the NZDUSD 0.66’s.
This week the key piece of data is the FOMC interest rate decision in the US out on Tuesday, market consensus is that they will hold constant at 2 percent. Nonetheless we could see some volatility in the rate and possibly some kiwi strength.
The week ahead in the US:
Tuesday 16th – Industrial Production (Aug)
Wednesday 17th – Consumer Price Index (Aug) mom & yoy, NAHB housing Market Index (Sep), FOMC Interest Rate Decision
Thursday 18th - Current Account Balance (Q2)
Friday 19th – Initial Jobless Claims (w/e Sep 14th)
AUDUSD
Again it was a week for USD strength the rate falling from opening on Monday at AUDUSD 0.8175 to hitting the low on Thursday of AUDUSD 0.794, the AUD then climbing back on Friday to end play in the 0.80’s.
As with the NZDUSD rate this week all eyes will be on the interest rate decision in the States on Tuesday and we could witness the rate climb in AUD favour leading up to the decision. For data out in the US this week please see NZDUSD above.
AUDNZD
The NZD appeared to be on the front foot last week gaining 2 cents on the AUD at the beginning of the week. The rate hitting the low of the week on Wednesday of AUDNZD 1.201, the lowest we have seen the rate since the start of May this year. The AUD then strengthened off the back of the interest rate cut in New Zealand and climbed to end the week in the AUDNZD 1.22’s.
With data out being light on both sides of the Tasman this week the rate could likely continue to trade in the AUDNZD 1.22 – 1.24 band.
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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.
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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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