Prior to the publication of minutes from the Bank of England’s latest policy meeting the Pound was ever-so-slightly softer against the New Zealand Dollar.
While the USD to NZD exchange rate strengthened thanks to US developments and Iraq-led risk aversion, the ‘Kiwi’ was able to advance on the Pound in response to upbeat current account figures for New Zealand.
The current account data detailed an increase in exports and a consequent tightening of the nation’s current account deficit.
A shortfall of 585 million Dollars was recorded in the first quarter, down by over 300 million Dollars from the fourth quarter of 2013. The Q1 deficit was the smallest recorded for four years. On the year, the Q1 deficit was equal to 2.8 per cent of GDP – a great improvement on the annual Q4 figure.
According to economist Jason Attewell; ‘The smaller deficit follows last quarter $1.6 billion fall, making this the smallest current account deficit since 2010. New Zealand is most likely to record a current account surplus in March quarters, when we have more overseas visitors coming to New Zealand.’
Meanwhile, the Pound was steady after sliding against several of its rivals on Tuesday after UK inflation slowed to a four and a half year low.
However, the minutes from the Bank of England’s latest policy meeting (released this morning) showed that the central bank is anticipating an interest rate increase occurring before the end of the year as the level of slack in the UK economy is ‘absorbed more quickly than had previously been expected’.
As investors got their heads round this generally hawkish set of minutes the Pound fluctuated against its most traded currency counterparts.
Yesterday the New Zealand Dollar faltered against the ‘Greenback’ in response to an unexpectedly strong US consumer price index. The 2.1 per cent annual increase in consumer prices upped the odds of the US Federal Reserve normalising interest rates within the next twelve months and helped the US Dollar post widespread gains.
The North American asset largely retained its new-found strength ahead of the Federal Open Market Committee’s policy announcement.
According to Ray Attrill; ‘There is a view that the Fed will struggle not to acknowledge the fact that inflation pressures do seem to be rising. The risk is still that we will see US yield’s generally higher out of the Fed and that the US Dollar will probably be stronger’.
During the Australasian session considerable Pound to New Zealand Dollar movement could be triggered by the release of New Zealand’s growth data. It is expected that the growth report will detail that first quarter GDP came in at 1.1 per cent on a quarter-on-quarter basis, up from growth of 0.9 per cent in the fourth quarter of last year. It is believed that New Zealand’s economy expanded by 3.7 per cent on the year.
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,0.8665,
New Zealand Dollar,,Euro,0.6396,
New Zealand Dollar,,Australian Dollar,0.9276,
New Zealand Dollar,,Pound Sterling,0.5109,
US Dollar,,New Zealand Dollar,1.1541,
Euro,,New Zealand Dollar,1.5631,
Australian Dollar,,New Zealand Dollar,1.0773,
Pound Sterling,,New Zealand Dollar, 1.9580,
[/table]
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