Several factors kept the Pound trending higher against the New Zealand Dollar on Wednesday.
On Tuesday the ‘Kiwi’ was dragged lower by speculation surrounding the prospect of Australia (New Zealand’s main trading partner) having its AAA credit rating downgraded by Standard & Poor’s.
New Zealand Dollar losses also occurred as commodity prices fluctuated and tensions in Ukraine and Thailand limited demand for higher-risk assets.
Meanwhile, the Pound was supported by a surprisingly strong UK inflation report and romped higher against peers like the ‘Kiwi’.
Overnight New Zealand’s credit card spending data showed a 3.2 per cent decline in April, month-on-month, which wiped out the 1.3 per cent advance recorded in March.
On the year credit card spending was up 3.2 per cent last month, down from an annual increase of 8.1 per cent.
Further New Zealand Dollar losses occurred as international dairy prices declined.
The Global Dairy Trade price index dropped by 1.8 per cent at the overnight auction, making dairy prices over 20 per cent lower than they were at the start of the year.
As dairy produce is one of New Zealand’s main exports this news piled additional pressure on the nation’s currency.
In the opinion of one ANZ Bank forex manager; ‘Basically, it’s just a continuation of what we saw yesterday. There is weaker Australian data coupled with the fall in the milk price overnight. Australasians have lost their shine’.
Data published during local trading also showed a drop in Australian consumer confidence.
As European trading began on Wednesday the Pound was enjoying a bullish relationship with several of its major currency counterparts.
The British asset extended gains after UK retail sales surged in April.
Sales climbed for a third month, rising 1.3 per cent following a revised 0.5 per cent gain in March.
Although the Bank of England seems set on keeping interest rates at record lows for the time being, positive economic reports like this make it less likely that the central bank will be able to hold out for much longer.
The Pound may well continue trading in a stronger position for the rest of the day.
Investors will also be looking ahead to Thursday and the release of consumer confidence and inflation expectation data for New Zealand. China’s manufacturing PMI will also be of considerable interest.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8573,
New Zealand Dollar,,Euro,0.6248,
New Zealand Dollar,,Australian Dollar,0.9279,
New Zealand Dollar,,Pound Sterling,0.5084,
US Dollar,,New Zealand Dollar,1.1675,
Euro,,New Zealand Dollar,1.6013,
Australian Dollar,,New Zealand Dollar,1.0768,
Pound Sterling,,New Zealand Dollar, 1.9656,
[/table]
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