• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Economy
    • Brexit
  • Financial Markets
    • Stocks
  • Immigration
EuropNews

EuropNews

New Zealand Dollar’s Breakdown Opens Higher Range for UK Pound

April 1, 2021 by Peter Daniels

The New Zealand Dollar has stabilized against many peers this week. Still, recent policy changes in Wellington have dealt a lingering blow to the Kiwi appetite and helped the Pound-to-New Zealand Dollar rate break up into a higher trading range spanning the distance between 1.96 and 2.00.

NZD’s Lethargy Helps Lift GBP/NZD

The Kiwi has risen against most majors this week in a tentative stabilization that follows an earlier March wounding that still leaves the New Zealand Dollar carrying 2021 losses against the U.S. Dollar, Canadian Dollar, Pound Sterling, and Norwegian Krone.

This comes after a fall from grace in which the New Zealand Dollar went from the best performing major currency for the months coming into 2021 to a laggard within the pack after Wellington’s move to scrap tax incentives for investors in residential property rubbed salt into wounds sustained over a disappointing final quarter GDP report.

The weaker-than-expected economic outcome and the government’s bid to curb runaway house price growth have taken some shine away from the Kiwi.

“The NZ$ continues to consolidate around 0.7000, with near-term risks remaining skewed to the downside. The USD continues to gain, and domestically, the NZ economic data pulse is cooling (with house prices expected to fall in response to fresh government curbs),” says Imre Speizer, head of NZ strategy at Westpac. “Longer term, we remain bullish, with an expected resumption of USD weakness as global growth improves further. That should help lift NZD/USD to 0.76 by year-end.”

The GDP disappointment was driven more by statistical base effects than it was true economic weakness, some economists had said, implying that New Zealand’s economy’s outlook is changed little from late last year when the New Zealand Dollar was the better performing major currency.

But with government intervention likely bringing pressure onto house prices, with all that entails consumer confidence and spending, investors have walked away in March from wagers suggesting the Reserve Bank of New Zealand (RBNZ) would lift the cash rate to 0.55% by August 2022.

That was the implied bet of the overnight-index-swap market on March 01, but by Wednesday this week, that market-implied August 2022 cash rate had fallen to just 0.42%. This is likely the culprit for the Kiwi’s losses, although few if any analysts see either factor changing the Kiwi outlook.

“Markets appear to have viewed these housing measures as likely to result in some tightening in the economy, thereby keeping the RBNZ on hold for longer,” says Ian Tomb, a vice president of global markets research at Goldman Sachs. “This will depend on how much actual tightening of economic conditions the NZ government’s new measures will lead to, but on balance, given the other considerations, we see risks as tilted toward higher yields from here.”

The Kiwi’s earlier outperformance came only after the RBNZ began to indicate in November that it was no longer so keen on the idea of adopting a negative interest rate, which is the recent context against which investors have judged the GDP disappointment and housing market intervention.

Filed Under: Economy

Primary Sidebar

Newsletter

  • Facebook
  • GitHub
  • Instagram
  • Pinterest
  • Twitter
  • YouTube

More to See

ENISA Cyber Attacks

ENISA Report Shows Massive Growth In Cyber Attacks For EU

April 5, 2022 By Daniel Stevens

Annalena Baerbock

Germany’s Green Party Reveals Economic Plans Post-COVID

April 27, 2021 By Peter Daniels

Footer

EuropNews.org

EuropNews is an independent financial news source covering headlines from forex analysis to mergers and acquisitions to immigration policies and everything in between the European economy.

EuropNews’ highlights the biggest headlines in the European financial sector and provides a broad range of information to help our audience understand and adapt to changes.

EuropNews stands to deliver accurate and noteworthy stories only.

EuropNews.org
inquiry@europnews.org
167-169 Great Portland Street
5th Floor, London, W1W 5PE

More Info:

  • About Us
  • Terms and Conditions
  • Contact Us
  • Privacy Policy

Search

What’s New:

  • Bit Prime AI Review 2023: Is This Trading App Scam Or Legit?
  • ENISA Report Shows Massive Growth In Cyber Attacks For EU
  • Germany’s Green Party Reveals Economic Plans Post-COVID
  • European Economic Recovery is Going Faster with France Leading the Growth
  • UK Retail Sales Improves, Private Sector At All Time High

Copyright © 2023 | europnews.org