Recent New Zealand Dollar weakness could be attributed to the ongoing slowing of its economy, the retail sector is undergoing the slowest rate of growth seen in 5 years. New Building permits were released on Tuesday which showed a disappointing figure of -3.7%, adding to NZD's woes. The New Zealand Dollar report below discusses how this could play out in the coming months. The table below shows the difference in NZD you could have received when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
On Tuesday Statistics New Zealand released its (MoM) Building Permits data for April. This shows the number of permits for new construction projects and is considered to be a leading indicator of the housing market. The release was a disappointing -3.7% which is bearish for the NZD.
The above data release adds to fears of a slowing national economy and the fact that the New Zealand retail sector is undergoing its slowest growth period in 5 years.
This tendency can be observed in recent GBPNZD rates, which have gone from highs of 1.96908 two weeks ago 1.89912 yesterday. This means that you could be 13,086 NZD better or worse off depending on when you had timed a 200,000 pound investment.
The New Zealand Dollar is a commodity based currency and is heavily influenced by the Chinese economy and events around the world.
The Kiwi was resilient when fears of a US-China trade war emerged and the appeasement between the two superpowers also had a positive effect. However the currency will be under further pressure if China reciprocates the latest American escalation in their trade war. The more a trade war occurs, the more we can expect to see Kiwi weakness. There is minor Terms of Trade data coming out today. This is a measure of the balance between imports and exports. A negative figure is expected.
Like with the Dollar and Pound, I expect EURNZD volatility to be influenced by developments - outside of New Zealand - in Italy and European Economic data releases.
The NZD has lost against the Pound in recent weeks. If you have an upcoming NZD requirement it will be worth getting in touch with our Account Managers as I think it will be best to take advantage of spikes in the coming days due to negative Brexit coverage in the UK. On the flip side, clients holding out for rates above 1.95 may struggle as I do not believe events in the UK will allow the Kiwi sufficient gains against the Pound in the coming weeks.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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