NZ/Aus/S. Africa - Weekly Update - Tuesday, December 15, 2009 6:43 - 0 Comments

World First Foreign Exchange NZD / AUD Update: 7 December 2009

AUD
The Australia dollar was particularly volatile last week, whilst also failing to strengthen after support from key pieces of economic data. Not only did the AUD buck the trend after US employment data but also after the RBA interest rate decision. The hike on Tuesday produced a response that was nothing short of lacklustre.

Local economic data was generally as expected and supportive of an economic recovery including the AiG Performance of Mfg Index (51.2) and Retail Sales (0.3%). Tuesday was the real money spinner as the market was on tenterhooks for a record third consecutive interest rate increase. The RBA failed to disappoint and raised rates (3.75%) however the response was less than favourable as the local currency weakened slightly. This was largely attributed to the RBA-speak after the announcement which was less bullish on near-term rate rises, indicating that inflation was at a reasonable level.

The markets response to the rate increase indicated that the AUD strength against the Greenback this year (30%) had factored in continued short-term monetary tightening. There was yet another surprise response by the market on Friday when the significantly better than expected US Non-farm Payrolls figure (-11K versus –125KE) and US Factory Orders (0.6%) failed to drive risk appetite or equity markets and the AUD lost territory in overnight trade.

The week ahead in Australia
Monday 7th – ANZ Job Advertisements.
Tuesday 8th – Current Account Balance, NAB Business Conditions, Westpac Consumer Confidence.
Wednesday 9th – Home Loans, Investment Lending, Trade Balance.
Thursday 10th – Consumer Inflation Expectation, Employment Change, Unemployment Rate.

AUDUSD
The pairing started the week at 0.9113, tracked upwards until the interest rate decision when it fell slightly to 0.9117. The pairing peaked on Thursday at the 0.9320 level only to close the week just above 0.9100.

The week ahead in the US:
Monday 7th – Fed’s Bernanke Speech, Consumer Credit.
Tuesday 8th – API Crude Oil Inventories, ABC/Washington Post Consumer Confidence.
Wednesday 9th – Wholesale Inventories, DOE Crude Oil Inventories.
Thursday 10th – Continuing Jobless Claims, Initial Jobless Claims, Trade Balance, Monthly Budget Statement.
Friday 11th – Import Price Index, Retail Sales, Business Inventories, Reuters/Michigan Consumer Sentiment Index.

AUDGBP
The pairing opened the week at 0.5514 and tracked upwards above the 0.5600 level only to fall away on Friday when it fell away to close the week at 0.5570.
 
The week ahead in the UK:
Tuesday 8th – BRC Retail Sales Monitor, Industrial Production, Manufacturing Production.
Wednesday 9th – Nationwide Consumer Confidence, Goods Trade Balance, Total Trade Balance.
Thursday 10th – BoE Interest Rate Decision.
Thursday 11th – PPI.

AUDEUR
The pairing performed well last week, opening at 0.6068 and closed the week at 0.6130.

The week ahead in the Eurozone:
Monday 7th – Factory Orders (Germany).
Tuesday 8th – Industrial Production (Germany).
Wednesday 9th – CPI (Germany), Imports (Germany), Trade Balance (Germany).
Thursday 10th – ECB Monthly Report.

NZD
The New Zealand dollar was closely correlated to risk appetite throughout the week which recovered early after the Dubai news the week earlier. The key piece of data for New Zealand came on Thursday with the significantly improved ANZ Commodity Price figure (10.5). This was particularly bullish for the NZD given the importance of exports for the country’s growth.

In the US, despite a strong Non-farm Payroll figure on Friday risk appetite was pared back as the carry trade and NZD fell with it. A key driver for this risk aversion was an US industry report which stated that the service industry in the US had contracted whilst there were murmurs from Greece concerning the financial strength of their financial institutions.
 
The week ahead in NZ:
Tuesday 8th – Credit Card Spending.
Wednesday 9th – RBNZ Interest Rate Decision, Terms of Trade Index.
Thursday 10th – Food Price Index.

AUDNZD
There was significant volatility in this pairing last week, opening at 1.2748 and closing at 1.2787. The pairing reached a low of a 1.2670 level and a high at the 1.2840 level.

GBPNZD
The pairing opened the week at 2.3065 and tracked downwards until Tuesday where it reached 2.2692 only to recover lost territory to close the week at 2.2912.

EURNZD
The pairing tracked downwards for most of the week, opening at the 2.0976 level and closing at the 2.0800 level.

NZDUSD
The NZD opened the week at 0.7134 then peaked in overnight trade on Thursday at the 0.7300 level and then fell to close the week at 0.7210.