New Zealand Dollar strengthens following EU summit

THE New Zealand Dollar has seen an increase over the last week after the markets were surprised by a positive outcome from the European Unions’ summit.



THE New Zealand Dollar has seen an increase over the last week after the markets were surprised by a positive outcome from the European Unions’ summit.

The Kiwi traded at 1.9550 to the British Pound on Friday up from the 1.9719 NZD on Monday, finishing on an average of 1.9676 for the week.

“Against all expectations including our own, European leaders finally grasped the mettle and announced a series of bold crisis-fighting measures,” Bank of New Zealand Currency Strategist Mike Jones said in a note. “A mixture of relief and surprise swept across markets, emboldening investors’ appetite for risky assets,” he added.

Risk appetite has grown after the outcome of the EU summit agreement, causing investors to move away from safe-haven assets and into seemingly riskier economies, such as New Zealand. This movement in risk appetite is one of the primary causes for the strengthening Kiwi.

Chinese manufacturing numbers released over the weekend, while showing a slight drop, were much better than expected. The positive sentiment flowed through to the New Zealand Dollar which strengthened further, especially against major currencies such as the US Dollar and the British Pound.

The focus for the week will be on rate decisions from the Reserve Bank of Australia, the European Central Bank and the Bank of England.

In New Zealand this week focus will be on the Treasury’s monthly economic indicators. Speculation expects risk appetite to remain high during the course of the upcoming week.

GBP / NZD: 1.9596
EUR / NZD : 1.5796
USD / NZD : 1.2477
AUD / NZD : 1.2778

Exchange rates as of 02/07/2012 at 09.37am.

Composed by Saskia Johnston of 1st Contact

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