NZD
Last week there was generally a lack of local data and new economic information released In New Zealand.  What was released was the ANZ commodity price index (February) the world price index fell by 4.6 percent.  However, a lower currency ensured the NZD index rose by 1.9 percent.    The wholesale trade survey for the December quarter showed that nominal sales fell 2.3 percent.  Adjusting for price changes shows a 1.6 percent increase in real terms.  Also out last week were QV house prices for February which showed an 8.9 percent decline and that was from -8.3 percent previously.

While the Reserve Bank of New Zealand takes centre stage this week, domestic data is expected to provide little joy on the economic front.

AUD
They are not ruling out further cuts towards the end of this year but at the official cash review last Tuesday the Reserve Bank of Australia left the cash rate unchanged at 3.25 percent after having cut by a total of 400 bps since last September.  While referring to the weakness in the global economy, the RBA makes reference to the fact that the Australian economy has not weakened as much as other economies.

Also out last week Australian GDP fell a much larger than expected 0.5 percent in Q4 with growth over the year at a barely positive +0.3 percent.

Residential building approvals fell yet again, down 3.7 percent in January after having fallen in each month since July and most of the months last
year prior to that, under weight of increasing tight monetary policy for most of last year.
Retail sales in January rose a pleasant 0.2 percent after the 3.8 percent spike in December.

The week ahead:
NZD
Tuesday 10th – Electronic Card Transactions (Feb)
Wednesday 11th – Terms of Trade Index (Q4) qoq
Thursday 12th – RBNZ Official Cash Rate, Business PMI (Feb), Food Prices (Feb)mom
Friday 13th – Retail Sales (Jan) mom

AUD
Tuesday 10th – NZB Business Confidence (Feb), ANZ Job Announcements (Feb)
Wednesday 11th – Home Loans (Jan), Investment Lending (Jan)
Thursday 12th – Consumer Inflation Expectation (Mar), Employment Change (Feb), Unemployment Rate (Feb)

GBPNZD
The bank of England elected to cut rates by 50 bps last week and the Treasury also gave permission for ‘quantitative easing’ to the tune of £150 billion with the Bank of England saying they would use half of that figure immediately.  The Bank of England plans to buy up huge amounts of government and corporate debt from the high street banks, reinvigorate their balance sheets and stimulate lending.

On the upside Consumer confidence rose to 43 from January’s low of 41, those surveyed thought that future would be brighter but they are still worried about the present as job losses continue to weigh.

Despite the interest rate cut in the UK Sterling managed to hold its ground against the New Zealand Dollar last week.  The rate commenced the week sitting comfortably in the 2.84’s, thereafter movements came from either side with the low of the week on Wednesday at 2.79 and the high on Tuesday just shy of the 2.85 level.  This week focus will be on the reaction of the rate to the interest rate announcement here in New Zealand on Thursday.  A break above the 2.80 level could yet again be on the cards for Sterling.

The week ahead in the UK:
Tuesday 10th – RICS House Price Balance (Feb), Industrial Production (Jan)mom
Wednesday 11th – NIESR GDP Estimate (Feb), Total Trade Balance (Jan)
Thursday 12th – BoE Releases Quarterly Inflation Attitudes Survey

GBPAUD
Movements in the GBPAUD rate were not clearly dictated by either party last week, it was a mixed bag of results.  The rate kicked off the week at GBPAUD 2.2272, from there it bounced between 2.17 and 2.2261 throughout the week.  With an array of data out in Australia this week we could see the rate remain closer to the GBPAUD 2.20 level for the time being.  For data out in the UK please refer to GBPNZD above.

EURNZD
As the Bank of England cut interest rates by 50bps so did the ECB, bringing the rate down to 1.50 percent which was in-line with expectations.  GDP figure for quarter 4 showed a -1.5 percent result which again was no surprise and in-line with forecasts.

Despite anticipation of a rate drop in the Euro zone the Euro took a dive against the NZD last week.  On Monday the Euro started off strongly sitting at EURNZD 2.5496 to then slide over Tuesday and Wednesday down below the 2.50 level.  EUR then tentatively clawed back some of its lost ground on Thursday and Friday and closed at EURNZD 2.524.

The week ahead in the Euro zone:
Tuesday 10th – Germany Consumer Price Index (Feb) mom, Trade Balance (Jan), Current Account (Jan), PPI (Jan)
Thursday 12th – Germany Factory Orders (Jan) mom, Industrial Production (Jan) mom
Friday 13th – Retail Sales (Jan)

EURAUD
Last week as with the EURNZD the Euro took a hammering towards the end of the week.   The rate began the week looking healthy for the Euro at EURAUD 1.994, from there it took a 5 cent dip and into a midweek low of 1.94.  In Euros defence it wasn’t there long before it clawed its way back up to end play on Friday in the 1.97’s.

This week with data out second tier in nature from both sides we could see the rate range trade between the 1.96 – 1.99 band.  For data out in the Euro zone this week please refer to EURNZD above.

NZDUSD
The NZD survived another week testing around the key 50 levels.  Considering the weakness we’ve seen across equities around the globe, the NZD’s ‘robustness’, looks somewhat impressive.   This week we see little on the horizon to fundamentally alter recent ranges.  While the RBNZ will take centre stage the market is expected to take a smaller cut in its stride, on the back of this could mean little in the way of volatility in the NZDUSD rate this week.

The week ahead in the US:
Wednesday 11th – Wholesale Inventories (Jan)
Thursday 12th – Monthly Budget Statement (Feb)
Friday 13th – Advance Retail Sales (Feb), Retail Sales Less Autos (Feb), Initial Jobless Claims (w/e 8 Mar), Continuing Claims (w/e 1 Mar), Business Inventories (Jan)

AUDUSD
Movements in the AUDUSD were in two minds last week, the week commenced with the rate at the 0.63 to then spike on Tuesday above the 0.64 level which was short lived before the AUD took a dive and the rate dipped below the 0.63 level briefly on Tuesday.  On Wednesday the Australian Dollar took control and charged up above the 0.65 level to the high of the week AUDUSD 0.6520.

This week data released is heavily weighted at the latter part of the week, around this time we could see a shift in the rate down towards the AUDUSD 0.63 level.  For data out in the US please refer to USDNZD above.

AUDNZD
Last week commenced with the Australian Dollar having a strong foothold against the New Zealand Dollar where it rose above the 1.29 level for a short time on Tuesday.  Post interest rate announcement the rate dipped and remained in the 1.27 – 1.285 range for the duration of the week.   With attention this week turned to the Reserve Bank of New Zealand for the interest rate decision on Thursday we could see another climb come from across the ditch and the AUD push back above the 1.28 level.

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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. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.