THE New Zealand Dollar led an interesting week, trading at 1.956 against the British Pound, and 1.537 against the Euro but sliding to the region of 1.52 by Friday.
The Kiwi hit a midweek downward spiral after news of the slowest consumer price growth experienced in 12 years. This caused speculation that the central bank would keep interest rates at a record low for a longer period of time.
Prices rose a meager 0.3% from the previous quarter, down from a previous growth figure of 0.5%. Market reaction to the news appeared to be limited as investors waited on the outcome of US Fed Chairman Ben Bernanke’s monetary policy report.
Imre Speizer, of WBC said, “The last few days have been all about the lead up to the Bernanke’s testimony and that will continue to be the main driver of the markets.”
By late week trading, the Kiwi had slid as fears mounted that Europe’s debt crisis was worsening. After Spanish yields rose to the highest since the Euro’s inception, the NZ Dollar dropped against all sixteen of its major counterparts.
For the week ahead, developments and sentiment in the Euro region can be expected to affect the Kiwi, according to Thomas Averill of Rochford Capital inSydney, “The European crisis is far from solved and those concerns are weighing on the market,” he said.
“Risk sentiment is very fragile and very volatile. You’ll likely to see the Aussie and the Kiwi follow equities south.”
Exchange rates as of 10h00 GMT+1, 23 July 2012
Compiled by Jesse Crooks of 1st Contact Forex
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