NZD
The OECDs latest annual Economic Survey of New Zealand released last week was quite clear in stating the considerable challenges the economy faces over the coming 24 months.  They have noted that “The economy was already in recession during 2008 and is likely to remain so throughout 2009, before recovering only hesitantly in 2010, as major deleveraging continues.”  Furthermore they are forecasting a contraction in economic growth of 2.8 percent this year and a subdued recovery of only 0.5 percent for 2010.

The other big development last week was the release of the March quarter CPI.  As expected, the headline CPI rose by 0.3 percent in the quarter, taking annual inflation to 3.0 percent.  This is the first time inflation has been within the RBNZ’s target band of 1 to 3 percent since June 2007.  Inflation is no longer an immediate concern and this paves the way for more monetary policy relief.

Retail sales for February rose by 0.2 percent, while core spending fell 0.1 percent.

AUD
This week the Reserve Bank of Australia will release the minutes from their April board meeting on Tuesday, where they will gain highlight the key reasoning behind their 25 bps rate cut.  Of particular interest will be just how close they were to leaving rates on hold, or alternatively to cutting rates by a larger amount.

The week ahead:
NZD
Tuesday 21st – Visitor Arrivals (March) mom
Thursday 23rd – Credit Card Spending (March) mom

AUD
Monday 20th – Producer Price Index (Q1) – qoq
Tuesday 21st – RBAs Board’s April Minutes
Wednesday 22nd – DEWR Skilled Vacancies (Apr) mom, Consumer Prices (Q1) qoq
Thursday 23rd – New Motor Vehicle Sales (Mar) mom

GBPNZD
Sterling gained steadily on the New Zealand Dollar throughout the duration of last week.  The rate rose from the GBPNZD 2.51 (NZDGBP 0.3984) level it commenced the week at to the high of the week on Thursday of 2.62 (0.3817), it was down a fraction on Friday at 2.598 (0.3849). 

Wednesday will be the highlight this week with the MPC minutes to the April meeting being released.  Also published on Wednesday are the latest figures on the labour market.  These are likely to make further grim reading, with the claimant count rising to around 4.6 percent.  Later on Wednesday in the UK the Budget should be a sobering affair, the Chancellor will revise down his projections for growth in 2009 and 2010 and commensurately have to revise up his projections for government borrowing in those years.

With a fairly quiet week in New Zealand the GBPNZD rate could continue to test the 2.60 (0.3846) level and with the momentum form last week hover in the low 2.6’s towards the latter end of the week.

The week ahead in the UK:
Monday 20th – Rightmove House Prices (Apr) mom
Tuesday 21st – CPI (Mar) mom
Wednesday 22nd – Bank of England Minutes, Jobless Claims Change (Mar)

GBPAUD
Sterling dominated all movements in this pairing at the beginning of last week with the rate climbing 4 cents from the low of the week on Monday 2.0295 (AUDGBP 0.4927) to the high on Wednesday of 2.0811 (0.4805).  For the remainder of the week the GBPAUD rate traded between the 2.05 – 2.075 (0.4878 – 0.4819) band.  

As in the UK the RBA will release the minutes for their April Board Meeting on Tuesday where they will highlight the key reasoning behind their 25bps rate cut.  On the data front Q1 CPI is released on Wednesday, where a 0.3 percent rise in headline is expected.

This week we could see the rate continue to trade in these lower levels in the 2.04 – 2.08 (0.4901 – 0.4808) band.  For data out in the UK this week please refer to GBPNZD above.

EURNZD
It was the commodity currency that took the hit in this pairing last week with Euro making steady gains throughout the week and ending the week at EURNZD 2.2936 a 4 cent gain from where trading commenced on Monday.

Euro zone is hoping that data out this week the German ZEW and Ifo surveys as well as the Advance estimate of the Euro zone manufacturing and service sector PMIs will all show some stabilization.

The week ahead in the Euro zone:
Tuesday 21st – ZEW Survey (Economic Sentiment)
Thursday 23rd – PMI Manufacturing/Services, Industrial New Orders (Feb)mom
Friday 24th – German Ifo (Business climate)(Apr)

EURAUD
The Euro was slightly down at the end of last week having kicked off the week trading around the 1.82 level the Euro gained mid week climbing to the high of the week on Wednesday of 1.847, from there it fell to end trading on Friday at EURAUD 1.813. 

With commodity currencies taking somewhat of a battering the last couple of weeks we could see the EURAUD possibly pick back up this week especially if the data out in the Euro zone is indicative of the economic situation there stabilizing.  For data out in the Euro zone please refer to EURNZD above.

NZDUSD
The US would be pleased with a lot of data last week as their financial institutions showed some black ink for the first time in 15 months.  Consumer confidence rebounded probably on continued equity strength, but is a leading indicator and it’s looking up.

The recent positivity in the US appreciated the US Dollar against the New Zealand Dollar, the rate fell from just above the 0.59 level on Monday to close at 0.5708 on Friday and opened today down further at NZDUSD 0.56.
A quiet week data wise in both the US and New Zealand could cause the rate to sit tight in the current 0.56 – 0.58 range.

The week ahead in the US:
Thursday 23rd – house Price Index (Feb) mom
Friday 24th – Initial Jobless Claims (w/e Apr 19), Existing Home Sales (Mar) mom

AUDUSD
Movements in the AUDUSD rate were not as clear cut as with the NZDUSD pairing last week with pushes coming from either side.  Despite the positive data out in the US last week the US Dollar struggled to gain on the Australian Dollar.  The rate moved between 0.732 and 0.716 throughout the week and closed on Friday at 0.72.  With the recent higher levels seeming to have stabilized for the time being a similar band of 0.72 – 0.74 is where we may continue to see the AUDUSD rate this week.  For data out in the US please refer to NZDUSD above.

AUDNZD
The expectation of a 50bp rate cut in New Zealand at the end of the month could possibly be what is causing the NZD to struggle at present.  This was particularly evident against the AUD last week as it maintained its recent bout of strength. The AUDNZD commenced the week at 1.235 from there it was a straight forward climb in the Australian Dollars favour, the rate closed on Friday at 1.266.  With the Australian Dollar appreciating against most of its pairings at present and having broken above the AUDNZD 1.25 level , the possibility of a rate cut here in New Zealand next week could be all the fire the Australian Dollar needs to continue its stance above the 1.25 at present.

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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.