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Hi All,

Here is an update of what’s been happening in the Currency Markets throughout November with the New Zealand (NZD).

NBNZ (National Bank of New Zealand) Business Confidence took a step back to 48.2 from 49.1 the previous month but managed to hold near decade highs as confidence about the economy over the next 12 months remained strong; this also seems to be In line with GDP (Gross Domestic Product) growth of 2.5% in the coming year which is good news for the economy.

As expected the RBNZ (Reserve Bank of New Zealand) left rates on hold at 2.5% and after the rate decision, Governor Bollard issued an unexpectedly ‘soft’ statement which left many not as expectant for a rate rise as early as January. Bollard’s warnings about the vulnerability of the NZ economy were brought into reality as the Unemployment Rate (6.5%) hit its highest level for 9 years; the economy lost 17k jobs in Q3 and in light of this, the Governor reaffirmed his view that getting out of recession will be.

New Dwelling Consents (+3.3% m/m) gave further evidence of stabilisation in the housing market and recorded an increase for the 3rd straight month. The Business NZ Manufacturing PMI (50.6) slipped in October but recorded its second highest level since April 2008. Retail Sales (+0.2% m/m) were a bit more subdued and only managed to eke out a 0.1% gain in the whole quarter, as consumers continue to be wary of inflating personal debt in the face of on-going job insecurity. The Business Outlook sub-index also showed an improved positive outlook among business managers that their own company activity will improve over the next 12 months. With inflation expectations remaining subdued (+2.61% from 2.60%) there isn’t much pressure on the RBNZ to raise interest rates.

October Trade figures released at the end of the month showed the annual deficit fell to its lowest level in 7 years as the value of imports declined more sharply than that of exports which is positive for the economy. Finally, the Dubai bond repayment suspension hit the currency market hard, including the NZD, and so it wouldn’t be surprising for these moves to continue.


Current Central Bank Rates:

NZ (Federal Reserve): 2.50% (Next meeting 10th December)
UK (Bank of England): 0.50% (Next meeting 10th December)

GBP/NZD Highs & Lows of November:

High: 2.3299
Low: 2.2285

A movement of: 4.55%

Difference this would make on £200k

High: 465,980 NZD
Low: 445,700 NZD

A difference of 20,280 NZD

Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely you are to make your money go further.

Regards

Jon Sermon
HiFX
 
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