New Zealand Dollar Exchange Rate Predicted to Fall Back From Recent Best Levels on Profit Taking
Over the past week, the New Zealand Dollar rallied versus its major exchange rate peers and appreciated significantly. With that in mind, there is a high likelihood that the ‘Kiwi’ (NZD) will soften over the course of next week as a result of overvaluation concerns and profit taking.
A quick foreign exchange market summary before we bring you the rest of the report:
On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
Today finds the pound to euro spot exchange rate priced at 1.161.
The pound conversion rate (against australian dollar) is quoted at 1.927 AUD/GBP.
FX markets see the pound vs us dollar exchange rate converting at 1.237.
The live inter-bank GBP-CAD spot rate is quoted as 1.701 today.
FX markets see the pound vs japanese yen exchange rate converting at 191.255.
NB: the forex rates mentioned above, revised as of 19th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Last week the New Zealand Dollar was one of the best performing currencies having risen significantly against the majority of its major peers. One major contributor to the uptrend was diary prices which solidified after auctions addressed the significantly detrimental impact low prices were having on farmers.
Additional gains came in response to China’s equity market which was closed for a five-day holiday. The lack of concern regarding the Shanghai Composite Index during this time supported trader risk-appetite. However, even after the Shanghai Composite Index reopened stocks rose which saw continued improvement to market sentiment.
And perhaps the most dominant contributor to the ‘Kiwi’ appreciation was a succession of disappointing US data publications. With US data failing to meet with expectations, many traders were forced to delay bets regarding the timing of a Federal Reserve interest rate hike. This was compounded following the publication of minutes from the most recent Federal Open Market Committee (FOMC) interest rate decision. The minutes showed policymakers were reluctant to consider raising rates until global economic growth improves. The minutes pertained to a meeting which preceded a report from the International Monetary Fund (IMF) that cut global growth forecasts, so naturally many traders fear a long-term delay to a Fed benchmark rate hike. This is all supportive for the high-yielding risk-correlated ‘Kiwi’.
New Zealand Dollar Forecast to Decline, Inflation Data in Focus
Given that the Reserve Bank of New Zealand (RBNZ) fear that New Zealand Dollar overvaluation with have a significantly detrimental impact on growth, policymakers are likely to attempt to talk down the ‘Kiwi’ next week.
There will be several influential domestic data publications over the coming week with the potential to provoke New Zealand Dollar volatility. Perhaps the most significant of which will be Thursday’s third-quarter Consumer Price Index. With global price pressures lacking, a better-than-expected result for New Zealand’s key inflation report is likely to cause the South Pacific asset to rally.
In addition to domestic data, US Dollar position, commodity prices, China’s economic standing, and risk sentiment will all contribute to ‘Kiwi’ movement next week.
New Zealand Dollar Spot Rates at the End of Last Week
Towards the close of last week’s trade…
The New Zealand Dollar to Australian Dollar exchange rate was trending in the region of 0.9137.
The New Zealand Dollar to Pound Sterling exchange rate was trending in the region of 0.4374.
The New Zealand Dollar to US Dollar exchange rate is currently trending in the region of 0.6703.