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The NZ dollar grinds higher against the AUD....finally!

Written by Sam Coxhead on January 12th, 2012.      0 comments

5.15 PM (NZT) The New Zealand Economy:
There has been very little in the way of top economic data in NZ this week. Tuesday’s building consents number was weak, but given the volatile nature of this series, can be discounted. Next week proves to be a little more interesting, with the latest quarterly survey of business opinion from the NZ Institute of Economic Research due on Tuesday ahead of inflation numbers on Thursday.
The Australian Economy:
Lower than expected retail sales numbers on Monday shows the split nature of the Australian economy. Non mining related sectors remain under pressure almost across the board. The better than expected building consents numbers on Tuesday were of interest, but are traditionally volatile. Next week the all important monthly employment numbers are due for release, and these will be the focus of the week on Thursday.
The impact on this currency pair:
The NZ dollar has seen some solid and timely appreciation against the AUD this week. Rumours of large insurance related buying against a few different currencies has helped the NZD dollar outperform. The .7700 (1.2990) level did prove to be a reasonable hurdle as expected, but with the eventual consolidation through this level the way is opened up more potentially further appreciation. There has been some evidence of exiting of bought AUD/sold NZD positions by larger speculators and this would continue if the NZ dollar is able to make another leg higher against the AUD.
There is a risk however that with insurance demand satisfied that the NZD comes back under a little pressure in the short term, a move back below the .7700 (above1.2990) would be negative in the short term.
The current interbank midrate is:                                                            NZDAUD .7730                           AUDNZD 1.2936
The interbank range so far this week to date has been:                 NZDAUD .7625 - .7732             AUDNZD  1.2933 – 1.3115