This report looks at the upcoming US Fed interest rate decision and the impact it may have on commodity currencies, specifically the New Zealand Dollar. For live exchange rates please click here.
Pound to New Zealand Dollar rates have climbed over 1.6% this week, a majority of which can be attributed to Sterling gains.
Despite the positivity of some post-referendum data from the UK the Pound has generally been struggling against currencies from the other side of the world including the Australian Dollar and the New Zealand Dollar.
The economy in New Zealand has also been showing signs of contraction and it seems to be a ‘tug of war’ between which economy releases the least bad data of late. Retail figures and consumer spending in New Zealand fell surprisingly in August whereas in the UK retail remains fairly robust.
The resent gains for the GBPNZD have been widely jumped on by people who need to buy New Zealand dollars in anticipation of some data released later this evening. NZD GDP figures are released this evening and are expected to show quite an improvement of economic health, pushing up the value of the NZD and making it more expensive to buy.
Exports such as fruit and wine have been selling well even with the higher price of exports, this is in contrary to the sheep meat sector and forestry sector. It however seems that the Reserve bank of New Zealand are hesitant to cut interest rates in an effort to help exports due to the potential of making the housing bubble worse.
The continual speculation about when the US will raise interest rates next will be a continual theme for global markets for some time. This topic could easily impact the price of the NZD as global appetite for New Zealand’s superior interest rate and returns.
Currently there is a near 20% likelihood of an interest rate hike at the FEDs next meeting next week. I personally expect there to be a building forecast for a change later in the year, and if confirmed next week as part of the commentary from the FED, expect the NZD to get cheaper to buy as money starts flowing into the USD rather than the New Zealand Dollar.
For more information on how a US FED interest rate change could impact your New Zealand Dollar buying requirements, speak to our team today on 01494 725 353.
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