The Kiwi dollar has gained almost 1c on the US dollar, even after reporting an increase in the inflation rate. Strong reported profits, hiring and positive growth in investments have had a major influence, prompting the central bank to possibly raise the interest rate to cool inflationary pressures.
The RBNZ’s concern is that above-trend growth and a persistently strong housing market will drive up price pressures. So far, prices are running below their target though, with no real urgency to act. If prices do increase, we could see a significant short-term impact on the Kiwi.
Looking at news in the Chinese markets, data that was released showed the second largest economy in the world grew by 1.8% to 7.7% in the fourth courter. Although new data has indicated a slowdown in Chinese industrial production and retail sales, international trade with New Zealand is still strong. The data yesterday was largely in line with expectations and helped support the Australasian currencies, whose nations count the world’s second biggest economy as a major trading partner.
There is not much news coming out in the US that investors have to worry about. A number of countries will also be releasing their inflation reports and the most important release will be today’s consumer price report from New Zealand. Investors can keep an eye on the data that is expected to be released in Europe with a big focus on the Chinese data that may reflect a slowdown in their economy.
GBP / NZD: 1.977
EUR / NZD: 1.629
USD / NZD: 1.203
AUD / NZD: 1.057
Exchange rates as of 10:59 (GMT), 21 January 2014
Composed by Chris Davis
:: Note: The above exchange rates are based on “interbank” rates.
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