The New Zealand dollar has been performing reasonably well of late, and this week has been no exception making gains against the pound, euro and US dollar since the beginning of the week. This was despite a significant fall in the price of dairy products at the GDT Auctions released yesterday, from 2.2% to 1.7%.

Currency Pair% Change in 1 monthDifference on £200,000

The ANZ business confidence outlook for December was released yesterday and showed a vast improvement in economic sentiment, as 24.1% of businesses surveyed expected business conditions to deteriorate over the year ahead, compared to 37.1% in November.  Business confidence has struggled since October last year when New Zealand’s new Labour Government came into power and implemented a string of policies which affected business, including raising minimum wage, implementing taxes on fuel, and changing the current employment laws.

NZD makes gains despite lower dairy prices

US FED interest rate  decision impact on NZD

Another reason why the New Zealand dollar has performed so well this week is due to investors moving their funds away from the US dollar and into the New Zealand dollar, therefore strengthening its value. This is in case the Federal Reserve either keep US Interest Rates on hold this evening, or hint towards slowing down its aggressive rate hiking path seen since 2015, next year.

As Interest Rates in New Zealand are high compared to other areas of the world, currently at 1.75%, although it is a commodity based currency and therefore seen as a riskier currency to hold, investors would rather limit any losses as speculation mounts that the US economy could be cooling off.

If the FED give any signs towards this, we would see further New Zealand dollar strength towards the end of the week and clients looking to buy NZD could benefit from moving ahead of this release this evening.

Trade Balance figures including Imports and Exports data will all be released overnight tonight, along with Gross Domestic Product (GDP) figures which are expected to fall in the third quarter of this year from 1% to 0.6%. If this is the case, we could see just a small window of opportunity outside of trading hours to capitalise on spikes in NZD exchange rates, therefore a limit order contract could enable you to take advantage of any gains automatically if rates reach your desired level. Get in touch with us today to find out how this can work for you.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.