New Zealand Dollar (NZD) Exchange Rate Softens against Sterling, US Dollar
On Friday the New Zealand Dollar was a little softer against both the Pound and ‘Greenback’ as investor appetite for higher-risk assets was dampened.
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Thursday’s concerning growth data for the Eurozone and the surprising drop in US industrial/manufacturing production pushed investors towards safe-haven currencies and saw the ‘Kiwi’ broadly decline.
With the Eurozone posting economic growth of just 0.2 per cent in the first quarter of 2014 and aspects of the US economy underperforming, the global growth outlook is looking less rosy.
Although US initial jobless claims fell to a seven-year low of 297,000, the level of manufacturing production in the world’s largest economy fell by 0.4 per cent while industrial production slid by 0.6 per cent – increasing the odds of the Federal Reserve keeping interest rates on hold.
On Friday a lack of UK economic news restrained movement in the NZD/GBP pairing, but additional NZD/USD fluctuations could occur in response to US building permits and housing starts figures as well as the University of Michigan Confidence index.
As it stands the New Zealand Dollar is poised to record a modest 0.4 per cent gain against the ‘Greenback’.
Over the last few months the New Zealand Dollar has been buoyed by the Reserve Bank of New Zealand’s decision to increase interest rates, but in the view of market strategist Imre Speizer the ‘Kiwi’ could be about to lose momentum.
Speizer stated; ‘US interest rates have been falling sharply for quite a while, but the US Dollar is not following. On that basis, the Kiwi/USD has got a negative bias to it in the near-term.’
There are several economic reports for New Zealand on the horizon next week, including the nation’s performance of services index, credit card spending figures and consumer confidence data.
As China is one of New Zealand’s main trading partners, the nation’s HSBC Manufacturing PMI and conference board leading index will also have an impact on the ‘Kiwi’.
China’s manufacturing sector showed contraction in April, with the gauge coming in at 48.1, so investors’ will be hoping for a more upbeat result for May.
The New Zealand Dollar is currently trading against the British Pound in the region of 0.5062 and is trading against the US Dollar in the region of 0.8527.