Foreign Exchange - UK Daily Update - Wednesday, February 24, 2010 6:42 - 0 Comments

World First Foreign Exchange NZD / AUD Update: 15 February 2010

AUD
The market entered last week with a less assertive position from the RBA and anything but a vague position on the Greek Debt Crisis. Throughout most of last week however, the local currency was in the grips of a fight-back as the ECB worked on the Greece solution, equity markets performed well and risk appetite returned to the market. Locally, a particularly strong employment figure supported Australia’s economic recovery and the gloves were put back on.

The local economic data was mixed with Westpac Consumer Confidence (-2.6%) early in the week and Home Loans (-5.5%) data mid-week both worse than expected which weighed on the AUD. On Thursday however, the Unemployment Rate (5.3%) provided the direction needed and there was a significant shift upwards for the AUD. Importantly, as ECB President Jean-Claude Trichet left the RBA forum of central bankers in Sydney a day early, the conviction of the Euro-solution picked up pace and risk appetite returned to the market.

The current position of the various central banks couldn’t be more diverse. The RBA is playing an interest rate balancing act, President Trichet is managing the Greek debt crisis and the Fed has said it will increase the benchmark rate “before long”. The RBA had said it held off raising rates this month due to the “limited” information available. Governor Glen Stevens is conscious of asset bubbles forming, however he has noted previously that if the “root problem” is interest rates, then other “efforts to handle the problem…won’t work for long” The tighter labor market figure last week could be used to justify a rate increase.

The week ahead in Australia:
Tuesday 16th – NAB Business Conditions, RBA Meeting’s Minutes, Westpac Leading Index.
AUDUSD
The pairing performed particularly well last week, opening at 0.8670 and consistently pushed higher from Tuesday to reach a high of 0.8920 in Thursday’s overnight trade. The currency closed slightly down at 0.8897.

The week ahead in the US:
Tuesday 16th – NY Empire State Manufacturing Index, Net Long-term TIC Flows, Total Net TIC Flows, Fed’s Lockhart speech, NAHB Housing Market Index, ABC/Washington Post Consumer Confidence.
Wednesday 17th – MBA Mortgage Applications, Building Permits, Housing Starts, Import Price Index, Capacity Utilisation, Industrial Production, FOMC Minutes, API Crude Oil Inventories.
Thursday 18th – Continuing Jobless Claims, PPI, Leading Indicators, Philadelphia Fed Manufacturing Survey, EIA Crude Oil Stocks change, Fed’s Bullard speech.
Friday 19th – Fed’s Lockhart speech, CPI.

AUDGBP
The pairing was another strong performer last week, opening at 0.5557 and closing the week 0.5670.
The week ahead in the UK:

Monday 15th – Rightmove House Price Index.
Tuesday 16th – CPI, Core CPI, DCLG House Price Index, Retail Price Index.
Wednesday 17th – BoE Minutes, Claimant Count Rate, ILO Unemployment Rate, Jobless Claims Change.
Thursday – 18th M4 Money Supply, Public Sector Net Borrowing, CBI Industrial Trends Survey – Orders.
Friday 19th – Retail Sales.

AUDEUR
The pairing was the stellar performer late in the week, advancing with comments from the Eurozone regarding the bailout. The currency opened at 0.6344 and closed the week at 0.6507.

The week ahead in the Eurozone:
Tuesday 16th – ZEW Survey – Economic Sentiment (Germany).
Wednesday 17th – Wholesale Price Index (Germany), Construction Output, Trade Balance.
Thursday 18th – Consumer Confidence.
Friday 19th – PPI (Germany), Current Account.

NZD
The New Zealand performed well last week in line with risk appetite as it regained some of the lost ground from the week prior. The government noted that tax breaks may be used to stimulate growth whilst the economic data was mixed.

The New Zealand Prime Minister, John Key stated that they are considering a reduction in personal income taxes to stimulate economic growth. The Prime Minister noted that “the net result of a reduction in personal income taxes is to give people more choice”. The economic data was mixed including Business NZ PMI (52), the Food Price Index (2.1%) and Retail Sales (0.0%). The worse than expected retail sales figure was particularly important, and further reduces the pressure on the RBNZ to increase interest rates.

The week ahead in NZ:
Friday 19th – Credit Card Spending.

AUDNZD
The pairing opened at 1.2580 and remained stagnant until late in the week when the Australian unemployment figure strengthened the AUD. The pairing closed the week at 1.2754.
GBPNZD
The pairing opened the week at 2.2655 and performed well early and then slumped from Tuesday to close the week at 2.2392.
EURNZD
The pairing performed early in the week as risk appetite was pared back, however the NZD recovered with risk appetite. The pairing opened at 1.9795 and closed the week at 1.9554.
NZDUSD
The pairing was volatile last week however it had shifted upwards by week-end. The pairing opened at 0.6880 and closed the week 0.6975.