New Zealand Dollar Lower on Asian Slowdown
NEW ZEALAND DOLLAR REVIEW | The currency firmed up during early week trading, touching a record high against the Euro.
THE New Zealand Dollar traded at the 1.953 region against the British Pound, closing on Friday at the 1.94 mark.
The currency firmed up during early week trading, with the Kiwi touching a record high against the Euro. A move that was attributed to similar expansionary economic stimulus policies implemented by the European Central Bank, the Bank of England and the People’s Bank of China. The reassuring policy decisions by market players had turned investors towards risky assets, resulting in the Kiwi hitting a two month high against the US Dollar.
The strength lost momentum on Friday though after Asian stocks fell on the back of weak data from economic powerhouses such as the United States, China and Japan. Japan had indications that the manufacturing sector was slowing after machinery orders fell by 14.8% in May from April. The US released weak job data, and China’s consumer prices were shown to have risen at a pace that was slower than expected.
Although the data released seems disheartening for the Kiwi, most of it is temporary, with NZ’s Prime Minister John Key announcing expectations to see China overtake Australia as the nations’ top export destination. Mention was given to the success of the free-trade agreement between NZ and China, signed in 2008.
Tokai Tokyo’s Shibata was of the opinion that “China’s economy is likely to support the Australian and New Zealand currencies based on the scenario that it will rebound in the second half of this year.”
Mike Jones, of Bank of New Zealand, summed up this week’s forecast: “We expect nervousness about the global backdrop to keep risk appetite and ‘risk-sensitive’ currencies like the NZ dollar under pressure this week.”
Local data being released on Tuesday includes monthly property sale data, retail sales and a business sentiment survey.
Exchange rates as of 09h00, 9 July 2012
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