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NZDAUD remains locked in tight range

Written by Andrew Isbister on July 13th, 2012.      0 comments

The announcement yesterday that Vodafone was buying Australian Telstra Clear (for AUD 840 million), was reasonably significant, given transactions of this size are few and far between in the NZ business landscape. The announcement did lead to a little NZD weakness against the AUD, but only very minor. This is because whilst NZD will change hands to buy AUD at some point to fund the transaction, that could occur at any point in the coming month, and may be structured in a way that means very little currency impact. Also, the volume traded in the currency markets are so large, that these sorts of announcements and cash flows have very little material influence on currency market rates.

The disappointing Australian unemployment rate saw the AUD lose some ground against the NZD, but this was also minimal. What is bad for Australia is of course bad for NZ, so this release also impacted the NZD negatively as well. Overall the Chinese data released so far this week has been mixed, so whilst the drop in Australian imports was large, again, not a lot of impact currency wise. The market now focuses squarely on the all important Chinese GDP date for release this afternoon. Ignoring that data release, overall, with the recent RBA stance being less dovish than expected, a slight bias to a stronger AUD is the present market view. That said, any further deterioration in the global growth outlook, will see that bias quickly eliminated.