In response to less-than-ideal domestic data, the British Pound to New Zealand dollar (GBP/NZD) exchange rate fluctuated.
Having rallied significantly over the past few days the New Zealand Dollar exchange rate continues to hold a position of strength versus its currency peers.
There is the potential for NZD volatility overnight, however, with the publication of third-quarter Value of All Buildings.
Additional ‘Kiwi’ movement will likely occur in response to the Caixin China Composite and Services PMI.
There is, however, a chance of subdued market trade tomorrow ahead of the ECB decision given that traders are expecting market volatility in response to the outcome.
A quick foreign exchange market summary before we bring you the rest of the report:
On Saturday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
The GBP to AUD exchange rate converts at 1.928 today.
The pound conversion rate (against us dollar) is quoted at 1.237 USD/GBP.
NB: the forex rates mentioned above, revised as of 20th 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.
New Zealand Dollar Holds Gains after Dairy Prices Advanced
In response to yesterday’s Global Dairy Auction, which saw prices rise for the first time since early October, the New Zealand Dollar exchange rate advanced versus its peers.
The NZD continues to hold a position of strength in the early stages of Wednesday’s European session, but concerns regarding overvaluation has limited volatility.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending within a tight range in the region of 2.2592 on Wednesday morning.
The New Zealand dollar advanced against the British pound after November’s UK Manufacturing PMI was predicted to drop from 55.2 to 53.6, but the actual result dropped to 52.7.
The lack of significant depreciation can be attributed to positive results from Bank of England (BoE) stress tests which saw all seven major British banks pass tests designed to see if these institutions could survive another financial crisis.
Despite the fact that data out of China showed manufacturing output in the world’s second-largest economy remained in contraction territory, the New Zealand Dollar advanced versus its currency rivals.
The appreciation can be linked to November’s annual House Prices data which advanced by 15.0%.
This called into question the likelihood of a Reserve Bank of New Zealand (RBNZ) interest rate cut because policymakers will wish to avoid further stoking the housing bubble.
The ‘Kiwi’ (NZD) also benefitted today from a weaker US Dollar after the disappointing Chinese manufacturing data risks dampening Federal Reserve policymaker optimism.
Euro to New Zealand Dollar: Exchange Rate Predicted to Soften despite Positive European Data
The single currency advanced versus the majority of its currency rivals on Tuesday in response to mostly positive domestic data.
German Unemployment Change was predicted to decline by -5k in November, but the actual result saw a positive depreciation of -13k.
German Unemployment Rate also bettered estimates that unemployment would hold at 6.4% in November, with the actual result dropping to 6.3%.
What’s more, October’s Eurozone Unemployment Rate unexpectedly dropped to 10.7% and both German and Italian Manufacturing PMIs bettered the respective market consensuses.
Euro gains have been somewhat sluggish, however, amid concerns that the European Central Bank (ECB) will look to ease monetary policy on Thursday.
BNPP Predict that the Current NZD Uptrend will be Short-Lived
Although both the New Zealand Dollar and Australian Dollar have advanced significantly of late, analysts at BNP Paribas forecast the uptrend to be short-lived.
This is due to rising US yields which have caused the US Dollar to advance. In addition, BNPP warns that today’s dismal Chinese manufacturing data is likely to weigh on demand in the long-term.
‘We view that the prospects for NZD/USD to remain firmly bearish as China’s PMI data overnight highlights the ongoing headwinds (manufacturing PMI fell to 49.6) and due to higher US yields boosting the USD vs the commodity currencies.’
USD to NZD Exchange Rate Plummets ahead of US ISM Manufacturing
Whilst the disappointing Chinese economic data had minimal impact on the antipodean assets, the US Dollar dived in response.
This was due to concerns that difficulties arising in emerging market economies, led by an apparent slowdown in the world’s second-largest economy, will have a detrimental impact on Federal Reserve policymaker confidence.
Later today the US ISM Manufacturing report has the potential to provoke US Dollar volatility. With that being said, however, there is also the chance for the data to be overlooked with trader focus dominated by Chinese concerns.
New Zealand Dollar Forecast to Advance: Global Dairy Trade to Dictate Movement
The most recent Global Dairy Trade auction saw prices advance by 3.6%, the first price increase since early October.
This is likely to support demand for the New Zealand Dollar throughout tomorrow’s sessions given the lack of influential domestic data.
With that being said, November’s ANZ Commodity Price report may provoke NZD changes.
Positive results from the Global Dairy Trade auction may be overshadowed, however, depending on US Dollar movement and bets regarding the potential for a Fed rate hike in December.