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NZ inflationary pressures ease somewhat

Written by Sam Coxhead on October 25th, 2011.      0 comments

The NZD has seen renewed demand from investors as a wave of more positive economic news has washed over world markets. Chinese manufacturing numbers have come in better than expected and increase chances of a softer landing as the Chinese economy slows. In the midst of the US corporate earnings season, giant company Caterpillar reported improved earnings and this saw equity markets rally, taking the NZ dollar along for the ride.
The European debt situation looks to be coming to  a pivotal point. Wednesday is now earmarked as the day for another EU summit where actual details of the structure and plan to halt the debt issues are expected to be released. The market seems to be reasonably confident that these French/German plans will be finalized by then. At this stage the risk would appear to be disappointment if plans are not fully detailed.
Locally in New Zealand the quarterly inflation numbers just released show a rate of just +.4% vs the expectation of a .7% result. This has seen the NZD lower across the board, albeit not by a large margin.
The increased funding profile of the banks at the wholesale level, and  the NZ sovereign credit downgrade will probably mean that the Reserve Bank of New Zealand will not be forced into hiking the cash rate in the coming months, or indeed much in the coming year.
          Past 24 hours
  Current level Pre-NZ Inflation  % Chge NZ Inflation   Low High
NZD/USD 0.8050 0.8075 -0.31%   0.7993 0.8109
AUD/USD 1.0475 1.0468 0.07%   1.0311 1.0504
NZD/AUD 0.7685 0.7715 -0.39%   0.7689 0.7763
AUD/NZD 1.3012 1.2962 0.39%   1.2882 1.3006
NZD/GBP 0.5033 0.5050 -0.34%   0.5024 0.5065
NZD/EUR 0.5777 0.5800 -0.40%   0.5773 0.5823
NZD/YEN 61.27 61.47 -0.33%   60.89 61.64
NZD/CAD 0.8080 0.8107 -0.33%   0.8058 0.8135