Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Climbs Amid Greece Tensions

February 22, 2015 - Written by Frank Davies

STORY LINK Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Climbs Amid Greece Tensions

The Australian Dollar registered gains against the New Zealand Dollar during Friday’s session after having a bumpy ride this week. The Australian Dollar has been weighed down by tensions in the ongoing Greek debt situation as well as falls in commodity prices. The Greek government is attempting to renegotiate its austerity deal with its creditors—an event that has caused weeks of uncertainty and Euro sensitivity. In addition, the uptrend in the US Dollar caused further pressure on the Australian Dollar. Strategist Raiko Shareef stated: ‘Headlines regarding Greece’s debt standoff drove swings and roundabouts in market sentiment.’

However, after Greece asked for an extension in its current debt repayment programme on Thursday, the Eurogroup meeting on Friday could play a big part in Australian Dollar sentiment shifts. Shareef continued: ‘First, Greece had reportedly requested a six-month extension of the bailout program, but with some significant watering-down of its strictures. This sets the stage for another boisterous meeting of Eurogroup finance ministers this evening. It is unclear where the middle ground will be found, but markets seem very confident that a deal will be struck eventually.’

Meanwhile, the New Zealand Dollar has been pegged to reach parity against the ‘Aussie’ in the near future as strong New Zealand domestic data and a rise in milk prices make the ‘Kiwi’ attractive to investors. In addition, the Reserve Bank of New Zealand has suggested a period of stable interest rates is likely to occur whilst the Reserve Bank of Australia recently implemented a rate cut. Industry expert Derek Rankin commented: ‘You have got the New Zealand Reserve Bank on hold and you have got Australia cutting interest rates and that is really the major reason, money is coming across the Tasman and it’s pushing that exchange rate higher. Our economy is seen to be performing better than Australia.’

Monday will see the release of January’s New Zealand Credit Card Spending figures, which resided at 4.5% on the year in December. In addition, Australian Consumer Confidence will also emerge for the week through February 22nd. Australian Skilled Vacancies will be published on Tuesday as well as the RBNZ inflation expectation. Both Trans Tasman currencies will continue to be affected by any commodity price changes of assets such as gold, copper, iron ore and dairy. In addition, risk sentiment could cause fluctuations in oceanic markets amid the prospect of a global economic slowdown.

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