NZ/Aus/S. Africa - Weekly Update - Written by renee on Monday, February 16, 2009 21:18 - 0 Comments
World First NZD/AUD Weekly Update - 16th February 2009
NZD
Same story different week, sadly last week did not deviate from the array of disappointing data that we have come to expect from week to week.
Electronic card transactions for January were down 0.6 percent, while core spending fell 0.2 percent. In line with those results was the drop in retail sales in December, headline nominal sales fell 1 percent, while core sales fell 0.6 percent. For the quarter, real spending contracted 0.6 percent. Food prices in January rose 0.8 percent in the month, taking annual growth to 9.5 percent.
In seasonally adjusted terms in New Zealand, house sales fell 9.4 percent and median days to sell eased to 48. The median house price eased $3,500 to $325,000.
AUD
Out in Australia last week the latest readings on business confidence (January) and consumer sentiment (February) were even more apprehensive about the economy’s outlook. Business confidence fell 12 points in January – more than reversing December’s jump, to a new record low read of -32. Business conditions fell 5 to -11, taking the index back to levels reported in October.
January’s unemployment figures out last week showed that the unemployment rate rose to 4.8 percent in January. Painting a rosier picture last week were housing approvals, which showed first home buyers are now active again. The number of housing loans for owner occupation rose 6.4 percent in December (median 3.5 percent) after a 1.8 percent increase in November.
The week ahead:
NZD
Monday 16th - Producer Prices – Inputs and Outputs (Q4) qoq
AUD
Tuesday 17th – Reserve Bank’s Board February Minutes
Wednesday 18th – Retails Sales Ex Inflation (Q4) – qoq, Preliminary BoP Imports (Jan) mom
Thursday 19th – New Moto Vehicle Sales (Jan) mom
GBPNZD
Bank of England Governor Mervyn King has admitted the UK is in a ‘deep recession’. In the February Inflation Report, the Bank of England’s GDP projections contained a marked downward revision compared to the November Report, with the year-on-year contraction reaching 4.0 percent in the middle of this year.
Last week the Sterling couldn’t maintain the fire behind it and continues to lose ground against the New Zealand Dollar throughout the week. He rate opened at GBPNZD 2.788 on Monday and then slid the remainder of the week to close on Friday in the 2.74’s. Risk aversion and equities will continue to dictate near-term moves. Lack of local data this week means the NZD will be largely range bound, taking its cues from offshore.
The week ahead in the UK:
Monday 16th – Rightmove House Prices (Feb) mom
Tuesday 17th – CPI (Jan) – mom
Wednesday 18th – Bank of England Minutes
Thursday 19th – Public Finances, Public Sector Net Borrowing (Jan)
Friday 20th – Retail Sales (Jan)
GBPAUD
It was somewhat a mixed bag of results in the movement of GBPAUD last week, the week kicked off on Monday at GBPAUD 2.2158. Sterling then made its gains for the week and moved to the high of the week on Tuesday of 2.2308, from there the Australian Dollar recovered and the rate corrected to close in the 2.19’s on Friday.
With less on Australia’s agenda this week movements could come from the UK, a possible rally above the GBPAUD 2.20 level from Sterling might be on the cards. For data out in UK please see GBPNZD above.
EURNZD
Euro zone GDP contracted by more than expected in Q4. In Europe, ECB officials have again signaled that the ECB will be cutting rates in March. With various ECB members suggesting the ECB has room to cut rates further, we expect a 50 bps cut in March to 1.5 percent. Meanwhile Sweden’s Riksbank cut the target rate by 100 bps to 1.0 percent this week.
Movements went mostly to the Euro last week with the rate opening on Monday in the 2.43’s it dipped on Tuesday to the low of the week of EURNZD 2.4046 to then climb and range trade between the 2.44 – 2.47 band for the remainder of the week.
The week ahead in the Euro zone:
Tuesday 17th – Euro zone and Germany ZEW Survey (Economic Sentiment) Feb
Wednesday 18th – Construction Output (Dec) mom
Friday 20th – Germany PMI Manufacturing (Feb)
EURAUD
The EURAUD’s movements mirrored the EURNZD last week. At the beginning of the week the Australian Dollar made the gains and brought the rate down into the 1.90’s to then relent its momentum to the Euro, the rate then spent the rest of the week between the 1.94 – 1.98 band. For data out in the Euro zone please refer to EURNZD above.
NZDUSD
Early optimism about the US stimulus plan and the bank rescue package soon evaporated when details (or rather, the lack of) were announced. Indeed, the ongoing tooing and froing by US politicians did not help market confidence. In the end, the US $787b stimulus plan was passed.
On the data front, US retail sales surprisingly rose in January, up 1.0 percent (median forecast was for a 0.8 percent decline), after the 3.0 percent fall in December. Ex-auto sales rose 0.9 percent (median -0.4 percent) after the 3.2 percent fall in December. Petrol sales and spending on clothing and food drove the January gain.
The weekly jobless claims data fell 8k last week but are still at a very high 623k. The four-week average is at 607.5k, the highest since 1982. Last week’s non-farm payrolls release showed a rise in the unemployment rate to 7.6 percent in January from 7.2 percent in December. It will not be long before we see the unemployment rate rise above 8 percent.
The USD continues to benefit as a safe haven destination, no doubt by default rather than merit. After an initial spike in the rate above the NZDUSD 0.54 level on Monday the rate then traded down towards the end of the week and closed on Friday in the 0.52’s.
The week ahead in the US:
Wednesday 18th – Empire Manufacturing (Feb), NAHB housing Market Index (Feb)
Thursday 19th – Import Price Index (Jan) mom, Housing Starts (Jan), Building Permits (Jan), Industrial Production (Jan), Capacity Utilisation (Jan)
Friday 20th – PPI (Jan) mom, Initial Jobless Claims (w/e Feb 15th), Leading Indicators (Jan)
AUDUSD
As we have come to expect the AUDUSD pairings movements were not dissimilar from the NZDUSD pairing last week. The Australian Dollar had a short lived gain against the USD as the rate spiked to the high of the week above the AUDUSD 0.68 level on Monday. Thereafter it was a downhill slide for the Australian Dollar with the rate trading in the 0.64 – 0.66 band for the remainder of the week.
This week the ball is in the USD’s court as the US economy has the most to offer data wise. The way of things lately one would expect the results to continue to cast a negative picture of the US, whether this will give the USD cause to appreciate against the Australian Dollar we will see. For data out in the US this week please refer to NZDUSD above.
AUDNZD
The ongoing battle of the commodity currencies was somewhat of a tie last week. The AUDNZD rate began the week at AUDNZD 1.2603 from there the New Zealand Dollar took control and lead the rate down into the 1.24’s for the majority of the week. The Australian Dollar then made a comeback on Friday, the rate closing in the 1.25’s.
This week with data light on both sides of the ditch we might not witness too much movement from this pairing and continue to see it trade between the 1.24 – 1.26 band of last week.
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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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