Foreign Exchange - Australia Weekly Update - Monday, August 24, 2009 7:42 - 0 Comments

World First Foreign Exchange NZD / AUD Update: 24th August 2009

NZD
By and large the NZ dollar remained strong last week amid the improved global outlook and a continuing interest in risk or high yield investment. 

The markets are currently looking to China for direction – in short if China’s data exceeds expectation then that will potentially be beneficial to commodity currencies such as the NZ dollar and Australian dollar.  Many economists within New Zealand have therefore raised their outlook for the NZD and see few risks in the immediate future to the downside ie the NZ dollar will hold its strength.

The coming week has four counts of local data – Inflation expectation, trade balance, building consents and money supply – with mixed results expected.  However whether the data is poor or good will likely make little or fractional difference to the NZ dollar as the bigger picture is with the improved global outlook and subsequently a rise in risk appetite.

AUD
A number of Australian key speakers were in the press last week and the theme was by and large similar to the week prior; that of Australia being in good shape economically.

Kevin Rudd was having a high time of things when he addressed an Industry Group dinner in Canberra.  He cited his party’s political handling of the economic situation in Australia as the reason for their economies good position.  He was quick to have a go at the opposition who questioned his $43 billion stimulus program, stating this was the reason that Australia escaped recession.

On the flip side Treasury Secretary Ken Henry has warned there is still a chance that a second wave of global problems could hit the Australian economy so it was too early to suggest the fight back against the global downturn was successful.  However he did go on to state there were ‘grounds for optimism’.

Malcolm Edey, the central banks assistant governor, was somewhere in the middle ground between Prime Minister Rudd and Dr Henry’s views.  Speaking to a business forum Mr Edey suggested there were signs of economic recovery however they are still tentative.

The Australian dollar’s performance last week matched the speakers views – holding firm against the majority of its pairings.  Risk appetite is strong and commodity prices were on the up so the AUD enjoyed gains across the board apart from a small midweek glitch as reports surfaced from China that they were moving to tighten lenders’ capital requirements.  As with all commodity currencies the outlook is heavily reliant on Chinese data remaining strong – should the Chinese economic news come out better than market expectation then the Aussie dollar should continue to hold its strength or make further gains in the short term.

The week ahead:
NZD
Tuesday 25th – RBNZ 2yr Inflation Expectation (Q3)
Thursday 27th – Trade Balance (Jul)
Friday 28th – Building Permits (Jul) mom, Money Supply M3 (Jul) yoy

AUD
Monday 24th – New Motor Vehicle Sales (Jul) mom
Wednesday 26th – Construction Work Done (Q2), DEWR Skilled Vacancies (Aug) mom
Thursday 27th – Conference Board Leading Index (Jun), Private Capital Expenditure (Q2)

GBPNZD
Small movements were the way of things last week between Sterling and the New Zealand dollar.  From opening on Monday the GBPNZD rate held relatively constant around the 2.45 level through until Friday when Sterling took a dive and at close of the play the rate was at GBPNZD 2.42.

The week ahead in the UK:
Thursday 27th – Total Business Investment (Q2) qoq
Friday 28th – Gfk Consumer Confidence Survey (Aug), GDP (Q2) qoq, yoy

GBPAUD
The GBPAUD rate commenced the week at 1.9882, we then saw a climb from the Sterling camp bringing the rate up fractionally above the 2.00 level.  The Australian Dollar was the one to capitalise during the rest of the week with the rate drifting gradually towards 1.98 at end of play on Friday.

For data out in the UK please refer to GBPNZD above.

EURNZD
This pair started slightly up on Monday from where it closed play the week prior at EURNZD 2.1135. Tuesday saw the low of the week at EURNZD 2.09, with the Euro recovering slightly from there ending the week at 2.115.
 
The week ahead in the Eurozone:
Monday 24th – Industrial New Orders (Jun) mom
Tuesday 25th – German GDP (Q2) yoy, mom
Wednesday 26th – IFO – Business Climate, Current Assessment and Expectations (Aug)
Thursday 27th – German Gfk Consumer Confidence Survey (Sep), Money Supply M3 (Jul) yoy
Friday 28th – Consumer Confidence, Economic Confidence, Industrial Confidence, Services Confidence (Aug)

EURAUD
Again little movement was seen between the Euro and Australian dollar last week.  The remainder of the week was spent in the 1.70 – 1.715 region, the rate spiking on Friday and closing at 1.725.

For data out in the Euro zone please refer to EURNZD above.

NZDUSD
Last week the New Zealand dollar continued its climb against the US dollar gaining 2 cents throughout the week.  On Monday the NZDUSD traded at 0.665, from there it climbed and closed at 0.6824.

The week ahead in the US:
Wednesday 26th – Consumer Confidence (Aug), House Price Index (Jun) mom
Thursday 27th – Durable Goods Orders (Jul) mom, New Home Sales (Jul) mom
Friday 28th – GDP Annualised (Q2), Initial Jobless Claims (w/e Aug 23rd)

AUDUSD
Commodity currencies were strong last week on the back of risk appetites improving at present.  The Australian dollar moved from the beginning of the week at 0.8169 to end the week trading at AUDUSD 0.835.

For data out in the US please refer to NZDUSD above.

AUDNZD
Australian dollar slipped slightly against the New Zealand dollar last week, the rate dropping from 1.23 to the low of the week on Friday at 1.2208.

_____________________________________________________________________________________________

Please feel free to contact me (giles.smallwood@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.