Kiwi Dollar Gains as Risk Sentiment Spikes

8 Feb 2011 at 2 PM - Written by John Cameron

STORY LINK Kiwi Dollar Gains as Risk Sentiment Spikes

The New Zealand Dollar gained ground against a basket of currencies during last night’s Asian session. This was largely thanks to a positive Asian equities session, which saw the MSCI Asia Pacific Index gain 0.5%.

This forward move for Asian stock markets was largely driven by last night’s better-than-anticipated Japanese Trade figures. Analysts had expected the Japanese current account surplus to grow by ¥1,130.0Bn in December, however the figure came out significantly higher than this at ¥1,195.3Bn showing that demand remains high for Japanese exports in world markets.

In the States, the Dow Jones Industrial Average followed the Asian markets’ lead and has opened strongly, gaining 70 points in the first two hours of the trading day. Increased appetite for risk in world markets is causing the New Zealand Dollar to strengthen, showing that the positive correlation between appetite for risk and Kiwi Dollar strength remains very much intact.

Tonight sees the release of the QV House Price Survey for January. Analysts are expecting a poor figure; they predict that the annualised figure for January will show an annualised contraction of 0.9%. Any figure showing a smaller contraction than this would be well-received. A positive figure would provide significant support for the Kiwi Dollar.

Looking further ahead, Thursday’s Australian employment data is the next major risk event which will impact on the NZ Dollar. A better-than-anticipated figure would further bolster risk sentiment and provide additional support for the Kiwi Dollar. Friday morning’s Hose Price figures in New Zealand will provide further direction before the weekend close. Any readers considering moving NZ Dollars back to the UK should consider acting sooner rather than later to take advantage of the recent spike in risk sentiment.

TAGS: Pound New Zealand Dollar Forecasts New Zealand Dollar Forecasts