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Q3 NZ GDP disappoints.

Written by Sam Coxhead on December 20th, 2012.      0 comments

11:45 PM (NZT) The belated NZ 3rd quarter GDP number have just been released and reveal just a .2% rise in activity on the quarter. Market expectations were for a .4% rise, but given the horrible run of associated data already released from the 3rd quarter, this should have come as too much of a surprise.
 
The NZ dollar continues to give up some its recent gains across the board and confirms  thinking, that there was some kind of “flow” driven demand behind the move over the last couple of weeks. Now that the “flow” is out of the way the NZD should settle down back towards less seemingly overbought levels across the board.
 
Offshore markets remain illiquid and patchy ahead of the Christmas break and confirmation of some kind of can kicking fiscal deal between Obama and Congress in the US.
 
Currency pair Current level Pre-RBNZ Percentage change 24 hour range
NZDUSD 0.8338 0.8368 -0.36% 0.8338 0.8417
AUDUSD 1.0477 1.0482 -0.05% 1.0475 1.054
NZDAUD 0.7958 0.7979 -0.26% 0.7954 0.7993
AUDNZD 1.2566 1.2533 0.26% 1.2511 1.2572
NZDGBP 0.5133 0.5148 -0.29% 0.5128 0.5175
NZDEUR 0.6311 0.6320 -0.14% 0.6283 0.6360
NZDJPY 70.09 70.58 -0.69% 70.07 70.91
NZDCAD 0.8245 0.8267 -0.27% 0.8240 0.8289
Topics: NZD
 

Weekly FX Update - Markets stablise into year end.

Written by Sam Coxhead on December 18th, 2012.      0 comments

5:07 PM (NZT)

Market Overview:

This is the final Weekly commentary from Direct FX for 2012. We would like to take this opportunity to thank our client base for the on going support and appreciation. All the best for  the festive season, and an energetic and prosperous 2013! Whilst the commentary will recommence in the latter half of January, we are operational throughout the holiday period, with the exception of the statutory holidays.

Global sentiment has endured the final month of 2012 with surprising robustness. Little in the way of spectacular growth is expected in 2013, but less uncertainty in the early months should promote stability. An expectation that a fiscal agreement in the US will be reached at some stage. With Greece bedded down for the time being having been paid its 43 billion EURO tranche of aid funds, European sentiment has also improved. The Bank of Japan are likely to increase economic stimulation at this week’s monetary policy meeting or next, and this further adds towards support for the global economy. 2012 has been a year of sideways movement for the most part, with the NZ and Australian dollars seeing relatively contained ranges. Conditions point towards this trend continuing in 2013, with global growth’s slow grind back toward more historically average levels. Expect this to come with the usual splattering of increased fear and uncertainty.

Australia

There was little domestic focus for the Australian economy last week. Second tier data revealed lower than expected home loans activity, weaker business confidence and somewhat tepid consumer sentiment. The FED’s announcement of their new QE program boosted demand for commodities and the AUD saw demand with that. This week sees the final focus for 2012 come in the form of the RBA minutes from the last monetary policy meeting two weeks ago. These were unsurprising, and point towards a lower peak in mining investment, and a further softening in the non-mining economy that justified further support for demand. The market is pricing a further easing to the cash rate of 2.75% at the next RBA meeting on February 5th.

New Zealand

The strong demand for NZ dollars continued throughout the course of last week. The FED’s decision on monetary policy sealed the fate of the NZ, in a move that drove the commodity markets higher across the board. The was little in the way of domestic economic data, but this changes this week. Finally the market gets to digest the growth numbers for the 3rd quarter on Thursday. The market expectation is for a .5% number. The NZ Treasury half yearly fiscal update now forecasts 2013 growth at 2.3% and 2.9% for 2014, as the Christchurch rebuild continues to increase in pace. These numbers also see the Government remain on track to return to surplus in 2014/15.

United States

There was plenty of noise to digest in the US economy last week. The FED confirmed their intent to maintain the stimulatory economic conditions, but have given actual data guidance to when it may be eased back as the economy gains momentum. With inflation numbers revealing a tepid 1.8%, it will be sometime before the 2.5% target rate is threatening to drive interest rates higher. The FED also gave a target unemployment rate of 6.5% before monetary conditions would be tightened (leading to higher interest rates for man in the street). There was positive data in the form of manufacturing, and industrial production numbers. These indicate a business sector that has not pulled back investment as much as expected. But the fiscal negotiations remain painful to watch. Hopefully this week will see an agreement forged and this would further add to what should be considered relatively robust sentiment. This week sees further housing data, manufacturing and durable goods orders number up for release.

Europe

The latest tranche of 43 billion EURO’s of bailout funds has been sent to Greece. This coupled with the Spanish banking bailout will contain uncertainty for the coming months at least. Hopefully Greece can further efforts in 2013 to get its house in order and work towards returning to growth. Last week has saw German economic sentiment jump, but lower than expected manufacturing numbers. European inflation numbers remain at levels that require caution, with year on year inflation at 2.60%. Tomorrow’s business sentiment numbers round out the focus for the year.

United Kingdom

Last week saw better than expected employment and industrial orders numbers in the UK. There was also various statements made by Bank of England (BOE) officials with regards to trying to further support growth through extended quantitative easing (QE). With the economy struggling for growth credit rating agency S&P also revised the UK credit rating outlook from stable to negative and this undermined demand for the Pound Sterling at times. Later on today the latest UK inflation numbers will be released. These are important as they could affect the additional QE program at the BOE. Tomorrow sees the latest minutes from the BOE monetary policy meeting. Thursday sees retail sales released in what is the last number of note for the year.

Japan

The LDP party confirmed polling expectations with a relatively easy win in Sunday’s election. With coalition partners, new Prime Minister Abe will be able to put in place his economic stimulatory plans. His effectiveness in his previous time as PM was underwhelming, but certainly a fair more extreme attitude towards stimulating growth is evident now (read into this on going weakening of the YEN). It is unclear whether or not the BOJ will aggressive provide further stimulation at this week’s meeting or wait until early 2013. Certainly the election saw intense pressure mounting on the BOJ to be more aggressive. The YEN remains weaker across the board, and has been consolidating at these lower levels since the start of the week.

Canada

It was a very quiet weak for news in Canada last week. The trade deficit was lower than expected, and the manufacturing sector saw a slump in activity in November. This week sees the last of the notable data released. Retail sales numbers on Thursday are joined by the last monthly inflation and GDP numbers on Friday.

Major Announcements last week:

  • German Economic Sentiment 6.9 vs -11.4 expected
  • UK Unemployment 7.7% vs 7.8% expected
  • FED extend QE policy, targets 2.5% inflation and 6.5% unemployment
  • US Retail Sales +.3% vs +.5% expected
  • US Inflation .1% vs .2% expected
  • LDP wins lead coalition in Japanese elections
Topics: Economic news
 

The AUDCAD pair range bound for now.

Written by Sam Coxhead on December 14th, 2012.      0 comments

3:41 PM (NZT)The AUDCAD pairing remains in what have recently come a familiar range. Any efforts for the pair to move through the resistance at the 1.0420 level have proved a step to far for the AUD. Equally the support at 1.0300 is proving had for the CAD to push through also, so this is why we have seen this repetitive range establish over the last month or so. The AUD does seem vulnerable on other pairings, so this may lead to pressure against the CAD. Positive data in Canada late next week would also help push the pair back down towards more historically average levels. The RBA monetary policy meeting minutes will be closely watched on Tuesday, but are unlikely to materially affect the price action.

The current interbank midrate is:                                                   AUDCAD 1.0363 
                                                                                         
The interbank range so far this week to date has been:        AUDCAD 1.0330 – 1.0403
Topics: AUD CAD
 

Is the AUD vulnerable to a resurgent EURO?

Written by Sam Coxhead on December 14th, 2012.      0 comments

3:31 PM (NZT) The Euro has outperformed the AUD this week as the structural uncertainties in Europe subside once again. The pair remains in familiar and seemingly comfortable .8000-.8200 (1.2200 – 1.2500) recent range. If the European economic data looks like the worse has past as we star 2013, the AUD could come under some pressure. Consolidation through .8000 (1.2500) will be the initial target, before .7800(1.2820) for those looking for the pair to move back closer to more historically average levels. The RBA monetary policy meeting minutes next week will be closely watched. Its seems likely that the current levels may prove have offered good value buying of EURO with AUD over time.
 
The current interbank midrate is:                                                  AUDEUR .8045                    EURAUD 1.2430 
                                                                                         
The interbank range so far this week to date has been:       AUDEUR .8041 - .8144      EURAUD 1.2279 – 1.2436
Topics: EUR AUD
 

Uneventful week for the AUD against the Pound Sterling.

Written by Sam Coxhead on December 14th, 2012.      0 comments

3:18 PM (NZT) This pair has had a rather uneventful week. The tight range indicative of the lack of material economic news of impact in either economy. Around current levels offer good value buying of GBP, but do not expect the rates to move too dramatically in the short term. Next week’s RBA and BOE monetary policy meeting minutes will be closely watched, as will the monthly inflation and retail sales data in the UK.
 
The current interbank midrate is:                                                  AUDGBP  .6532                           GBPAUD 1.5309 
                                                                                         
The interbank range so far this week to date has been:       AUDGBP .6513 - .6545              GBPAUD 1.5279 – 1.5354
Topics: AUD GBP
 

Is the AUD vulnerable to a rebound from the US dollar?

Written by Sam Coxhead on December 14th, 2012.      0 comments

3:05 PM (NZT) It has been a mixed week for this pairing. The US dollar has endured periods of intense downside pressure and this eased the way for the AUD to set surprising highs on the week. Increasing speculation about further easing to the 3.00% cash rate from the RBA in early 2013 has helped stem the AUD appreciation. Other risk assets also look lethargic at currents levels, so this will add to the AUD vulnerability. Next week’s price action will predominantly driven the progress of talks between President Obama and the Republicans on the fiscal situation. The RBA monetary policy meeting minutes will also be of focus. It appears that the current levels could well prove to have offered good value buying of USD with Australian when looking back in a few weeks time.
 
The current interbank midrate is:                                                  AUDUSD  1.0530
                                                                                         
The interbank range so far this week to date has been:       AUDUSD 1.0467 – 1.0573
Topics: AUD USD
 

YEN weakens further against the NZD.

Written by Sam Coxhead on December 14th, 2012.      0 comments

1:46 PM (NZT) The Japanese YEN has continued to underperform against the NZD this week. This structural change towards weakness for the YEN has pushed the NZD to record high levels not seen since late 2008. The week coming is materially important for the future direction of this pair. The election and following BOJ monetary policy meeting will provide intense focus for the market, at a time that that typically offers lower levels of liquidity. The lower levels of liquidity mean that even more extreme moves maybe seen than would normally be experienced. The 3rd quarter NZ GDP number will also be closely watched. It would reasonable to expect the YEN weakness to continue in the short to medium term.
 
The current interbank midrate is:                                                  NZDJPY 70.47 
                                                                                         
The interbank range so far this week to date has been:       NZDJPY 68.44 – 7.55
Topics: NZD YEN JPY
 

The NZD chugs higher against the CAD.

Written by Sam Coxhead on December 14th, 2012.      0 comments

1:11 PM (NZT) The NZ dollar has seen continued demand against the CAD this week. The pair seems to have finally found some resistance at .8320 for the time being at least. The NZD move will have been accentuated by lower levels of liquidity as Christmas and year end approach. Any further gains from the NZ dollar are likely to be harder fought than the previous appreciation. The NZ GDP number will provide focus on Thursday, ahead of the Canadian GDP and inflation numbers on Friday. Current levels certainly look to offer great value buying of CAD with NZD.
 
The current interbank midrate is:                                                  NZDCAD .8345 
                                                                                         
The interbank range so far this week to date has been:       NZDCAD .8210 - .8312
Topics: NZD CAD
 

Limited range for the NZD EUR pairing.

Written by Sam Coxhead on December 14th, 2012.      0 comments

1:01 PM (NZT) This pair has seen a relatively small range this week. Both currencies have seen periods of solid demand, and this has seen the volatility limited when compared to other pairings. The positive structural news coming from Europe could well bode well for the EURO in the start 2013 at least. From here we should see the focus return to the economic fundamentals in Europe. Next week’s business confidence numbers will hopefully improve as expected Europe. The Q3 GDP data provides the final  NZ economic focus for 2012 on Thursday. The momentum seems to have waned a little for the NZ dollar over the last couple of days, so the pressure may come onto the NZD next week.
 
The current interbank midrate is:                                             NZDEUR .6445                      EURNZD 1.5516
                                                                                         
The interbank range so far this week to date has been:  NZDEUR .6444 - .6474       EURNZD 1.5446 – 1.5518
Topics: NZD EUR
 

Is this the top for the NZD vs the GBP?

Written by Sam Coxhead on December 14th, 2012.      0 comments

12:40 PM (NZT) The NZ dollar has seen further heavy demand against the GBP this week. It managed to break through the .5200 resistance (1.9230 support) reasonably early in the week, but since then the momentum has finally started to wane. Anywhere around the current levels offer good value buying of GBP with NZ dollars. Next week the NZ economy focus comes mainly from the release of the 3rd quarter GDP number on Thursday. In the UK, the busy lead up to Christmas will see the inflation number Tuesday, and retail sales number Thursday closely watched. If we see further appreciation from the NZ dollar from current levels, the ground will be harder fought than earlier gains.
 
The current interbank midrate is:                                             NZDGBP .5231                          GBPNZD 1.9117
                                                                                         
The interbank range so far this week to date has been:  NZDGBP .5184 - .5242           GBPNZD 1.9077 – 1.9290
Topics: NZD GBP
 

Good value buying of AUD with NZ dollars.

Written by Sam Coxhead on December 14th, 2012.      0 comments

12:24 PM (NZT) The NZ dollar has somewhat surprisingly seen continued demand against the Australian dollar this week. At the time of writing the pair sits at the upper level of the recent range. The relentless move seems to have played itself out for the time being at least. This type of move from the NZ dollar happens periodically, and is accentuated when the liquidity in markets lower, such as in this lead up to Christmas. Current levels look to offer very good value buying of AUD with NZ dollars. Next week sees the latest RBA monetary policy meeting minutes released on Tuesday, and these provide the sole Australian focus for the week. In New Zealand the belated release of the 3rd quarter GDP number on Thursday will be closely followed, with the market looking for a .5% result. If further NZ dollar demand is seen, the .8050 will offer stiff resistance (1.2420 support).
 
The current interbank midrate is:                                                  NZDAUD .8006               AUDNZD 1.2491
                                                                                         
The interbank range so far this week to date has been:                 NZDAUD .7921 - .8016    AUDNZD 1.2475 – 1.2625
Topics: NZD AUD
 

The NZD climbs higher against the US dollar.

Written by Sam Coxhead on December 14th, 2012.      0 comments

12:10 PM (NZT) The NZ dollar has seen wide spread demand this week, and against the US dollar has been no exception. But the unrelenting momentum has been tamed at the .8450 level at this stage. The increased demand since the RBNZ meeting was further fuelled by the FED monetary policy announcement this week. The move has been somewhat surprising to say the least, but typical of what can eventuate at times in the NZD market. The USD is due for a claw back of lost ground, and with other risk indicators looking tired, there is a good chance of the pull back for this pair. Lower levels of liquidity in the coming weeks could see accentuated moves. Next week sees the belated 3rd quarter GDP number released on Wednesday in NZ. In the US, the fiscal negotiations will dominate the focus, along with final GDP numbers and the latest manufacturing index numbers.
 
The current interbank midrate is:                                                  NZDUSD .8430
                                                                                         
The interbank range so far this week to date has been:       NZDUSD .8312 - .8455
Topics: NZD USD
 

Weekly FX Update - Central Banks to provide further stimulus.

Written by Sam Coxhead on December 11th, 2012.      0 comments

3:15 PM (NZT)
Market Overview
Last week saw a continuation of the major themes that have dominated the wider financial markets for 2012. Uncertainty in Europe looks to be re-emerging as political instability in Italy pushes debt funding rates higher for the non Franco-German governments. The major central banks look to continue their efforts to debase the value of their currencies. Expect further quantitative easing (QE: essentially the electronic printing of money, to stimulate economic growth) from the US FED this week, the Bank of Japan (BOJ) next week, the Bank of England (BOE) next year, and a lower cash rate from the European Central Bank (ECB) in the coming months. The fiscal negotiations are on going in the US. The lack of progress is starting to impact  in the economy as evidence of lower investment and falling consumer sentiment emerges. The improved outlook in China has continued and this bodes well for intra Asian trade in particular. The Australian and New Zealand dollars remain in demand as they look like finishing 2012 towards the upper end of their well established ranges. Conceivably the direction less nature of the foreign exchange markets will continue into the opening months of 2013, as the opposing forces of European/US uncertainty and the massive stimulatory efforts from the central banks, continue to battle for the upper hand.
 
Australia
The last week has been a very busy and interesting one for the Australian economy. Building approval and retail sales numbers came in below analyst’s expectations. But the more important numbers of GDP and employment did not disappoint. GDP was close to expectation at a relatively healthy .5%, and the Australian employment market continued to show its strength with the unemployment rate falling from 5.4 to 5.2%. The Reserve Bank of Australia (RBA) matched expectations with a .25% cut to a new cash rate of 3.00%. However further policy accommodation is not guaranteed and the market will have to digest the future economic data as it comes to light, to create expectations of direction from the RBA. Adding to positive sentiment will be the latest monthly data from China over the weekend showing industrial production and retail sales both ahead of forecasts in November. This week little in the way of domestic focus in Australia, so expect the wider markets sentiment to provide the lead into the end of 2012. Next week the RBA monetary policy meeting minutes will be released on Tuesday, but should not be of material impact.
 
New Zealand
There was singular focus for the NZ economy last week. The first monetary policy statement from new RBNZ Governor Wheeler provided the expected unchanged cash rate. However, the very neutral and balanced statement certainly caught some of the market unaware. The scramble to buy NZ dollars following the statement was somewhat surprising. Investors looking for the RBNZ to signal a bias towards an interest rate easing, provided much of the initial demand.  Current RBNZ projections see an unchanged cash rate of 2.50% for all of 2013. This week sees limited focus coming from the domestic economy. Next week finally sees the release of the 3rd quarter current account and GDP numbers on Wednesday and Thursday respectively. These provide the remaining focus for the year. Also of note has been Fonterra increased pay out forecast. The 2012/13 season expectations are now lifted to the 5.50 NZD farm gate pay out. This pay out lift has been on the cards since the improved Global Dairy Trade auctions over the past few months, but should provide an increased boost to the economy none the less.
 
The United States
The mixed outlook continued in the US economy last week. With a dark back drop of stagnating fiscal cliff negotiations the data flow was decidedly mixed. Employment, services and factory orders numbers beat expectations, while consumer sentiment and manufacturing numbers underperformed. The FED look likely to roll over to a new program of monetary easing at this week’s monetary policy announcement. Also of interest this week will be retail sales numbers, inflation and industrial production numbers. The fiscal negotiations will also remain at the very fore front of market focus. Last week’s plummet in the consumer sentiment is just an indication of the destructive nature of the uncertainty this situation promotes. Expect further brinkmanship from all parties on this issue, to the detriment of the wider US, and global economies.
 
The United Kingdom
The mixture of good and bad news for the UK economy continued last week. Manufacturing numbers were positive, but the construction and services sector remain under pressure. Finance Minister Osbourne released the latest Treasury forecasts for growth. 2012 growth expectations have been lowered to -.1% from the previous +.8% forecast, and expectation for 2013 and 2014 have been revised down also. As expected the BOE left monetary policy unchanged at their meeting last week, although further stimulation cannot be ruled out in the first half of 2013. The BOE monetary policy meeting minutes next week will likely shed further light on this. This week sees a relatively quiet economic calendar with the employment numbers on Wednesday providing the primary focus.
 
Europe
It has been an intense last week in Europe. The economic data was again mixed with reasonable manufacturing numbers being tempered by worse than expected retail sales data. Spanish efforts to meet deficit targets look to be have been in vain, and this saw bond yield increase. The ECB left monetary policy unchanged for the time being, but the prospect of lower interest rates remains real as serious debate was had on this subject. The flair up in Italian politics over the weekend has further increased uncertainty. Anti-austerity policy backers are gaining momentum in the polls and interim PM Monti has vowed to resign and cause early elections once his budget policies are passed early in the new year. Should Monti decide not to run for office, the increased uncertainty about the austerity program would likely see increasing bond yields for Italy, at a time that these could cause some major damage. It is reasonable to expect this to be major theme in 2013. Economic sentiment numbers, inflation and further manufacturing data provide the data focus for this week.
 
Japan
The build up to the 16 December elections remains intense in Japan. The YEN has remained under pressure for the most part as the LDP continue to lead the polls. Adding to the YEN weakness is speculation the BOJ will again add further stimulation to the economy at next week’s meeting. Reuters have anticipated the stimulation will be to the tune of ten trillion YEN. Yesterday saw the final GDP numbers for the 3rd quarter confirmed at -.9%, and interestingly with the second quarter revised down also, the economy finds itself in its fifth recession in the last 15 years. The remainder of the week sees the monthly core-machinery and manufacturing results provide the focus, albeit limited market reaction expected ahead of the election in the weekend.
 
Canada
The BOC left monetary policy unchanged as expected last week. It maintains a mild hiking bias with language such as “some modest withdrawal of stimulus will likely be required”. The economic data was mixed with construction numbers jumping, but the manufacturing index under performing. Of note has been the Government giving the green light for the Chinese investment funds to make a circa 15 billion investment in the Nexen iron sands company. This decision is undoubtedly positive for the CAD, as it removes a significant uncertainty for CAD demand. Next week is a busy one for Canadian economic news with retail sales, inflation and GDP all due for release.

Major Announcements last week:

  • Australian Retail Sales 0.0% vs +.4% expected
  • UK Manufacturing 49.1 vs 48.1 expected
  • US Manufacturing 49.5 vs 51.5 expected
  • RBA cuts cash rate to 3.00% as expected
  • BOC leaves cash rate unchanged as expected
  • Australian GDP +.5% as expected
  • RBNZ leaves cash rate unchanged as expected
  • Australian Unemployment rate 5.2% vs 5.4% expected
  • BOE leaves monetary policy unchanged
  • ECB leaves monetary policy unchanged
  • Canadian Unemployment rate 7.2% vs 7.4% expected
  • US Unemployment rate 7.7% vs 7.9% expected
  • US Consumer Sentiment 74.5 vs 81.2 expected
 

Economies of interest this week.

Written by Sam Coxhead on December 6th, 2012.      0 comments

4:32 PM (NZT)
Australia
It was been very busy week of economic news for the Australian economy, and focus is not yet complete. However, for all the potential for volatility, the price action has been remarkably contained. Retail sales and building approval numbers were lower than expected. The RBA reduced the cash rate to 3.00% , which was in line with market expectations for the most part. However, the RBA again reserve judgement on future policy moves until the picture becomes more clear in 2013. The market is pricing a chance of further policy accommodation in the coming months, but the signs are that further easing is no certainty. Today’s employment numbers revealed a fall in the cash rate to 5.2% (against an expectation of 5.5%) , with solid monthly jobs growth of 13.9k, albeit a small fall in full time jobs was countered by an 18k increase in part time work. The trade balance tomorrow rounds out the last notable piece of Australian economic data for 2012, and sees a return to the focus on the wider markets  to provide the lead on Australian dollar demand.
 
New Zealand
The new RBNZ Governor Wheeler, delivered a very well balanced monetary policy statement today. Following the announcement was  a lengthy press conference that shed further light to the current thinking inside the central bank. The level of the NZD remains of concern, but not at levels that would give the green light for any RBNZ intervention. Current forecasts see the cash rate remaining unchanged at 2.50% into 2014, and the cash rate is unlikely to change until the inflation rate moves back towards 2%. Some of the offshore market participants were positioned for more “dovish” remarks that indicated a bias towards further policy easing, but these were not forthcoming. The balanced statement has been followed a small scramble to cover “sold NZD” positions. Whether or not these NZD gains can be maintained is yet to be seen. Uncertainty in the US remains in place as fiscal negotiations have been largely successful so far.  The notable remaining data for 2012 comes in the form of the belated Q3 GDP number on the 20th  Dec. Ahead of that, expect the wider market sentiment to provide the lead, once the “short covering” following today’s announcement has played out.
 
The United States
The negotiations over the fiscal cliff the US remain difficult. Little progress has been reported, and its seems likely that some kind of muddling solution will be found at the 11th hour. This result would be a temporary band aid at best. Focus will then turn to the consequent “debt ceiling” negotiations to come in early 2013. This week’s economic data has been mixed so far. Services data has outperformed, but manufacturing were uninspiring. The monthly employment number on Friday provide the remaining focus for the week. Next week sees the FED  make their monetary policy announcement on Wednesday, the release of retail sales numbers Thursday, and inflation data Friday. The fiscal negotiations will remain the primary driver of sentiment in the short term.
 
The United Kingdom
Economic news in the UK remains mixed at best this week. Manufacturing numbers were more perky than expected, but these were balanced by softer than expected services and construction data. Later on today we will see the Bank of England announce what will likely be an unchanged monetary policy decision. The Great British Pound has performed moderately well on the week, and has been supported by the buoyant nature of demand for EURO’s. Next week sees the release of the monthly employment numbers on Tuesday as the focus.
 
Europe
It has been an interesting week in Europe. The EURO has certainly benefitted from positive sentiment for the most part. Interestingly, the stock exchanges in Germany and France hit 52 week highs. The uncertainty is still centred around Spain for the most part, now that Greece has been sorted out in the short term. Spanish finance officials hinted that Spain will likely miss its deficit targets for 2012 and this pushed yields higher that pulled the EURO from its highs. European retail sales numbers disappointed for October, and this data added little to sentiment.  The European Central Bank meet to announce their monetary announcement later on today, although no change is expected at this meeting. It seems likely that the cash rate will be lowered at some stage early in 2012. Next week sees the release of the complete manufacturing numbers and these will be closely followed.
 
Canada
The Bank of Canada maintained its recent message at its monetary policy announcement on Tuesday. It sees that “some modest withdrawal of stimulus will likely be required” at some stage. Later on today the latest building permit and manufacturing numbers come ahead of the employment numbers tomorrow. Next week sees Wednesday’s trade balance numbers as almost the sole focus.
Topics: Economic news
 

The NZ dollar outperforms the GBP.

Written by Sam Coxhead on December 6th, 2012.      0 comments

4:34 PM (NZT)The price action this week has seen the NZD push up close to the top if its recent range. The scramble to cover “sold NZD” positions following what should have been an expected statement from the RBNZ, has driven the demand for the NZD. The recent weak NZ Q3 economic data has not been enough to sway the RBNZ into an easing bias. Current levels offer good value buying of GBP with NZ dollars, especially given the potential  uncertainty in the wider market in the coming weeks. Next week sees the UK employment numbers dominate the focus for this pair, ahead of the belated Q3 NZ employment numbers the following week.
 
The current interbank midrate is:                                             NZDGBP .5157                       GBPNZD 1.9391
                                                                                         
The interbank range so far this week to date has been:  NZDGBP .5091 - .5161                GBPNZD 1.9376 – 1.9643
Topics: NZD GBP