Australian Dollar Climbs versus New Zealand Dollar (AUD/NZD) as Aussie Sentiment Increases

March 15, 2015 - Written by David Woodsmith

STORY LINK Australian Dollar Climbs versus New Zealand Dollar (AUD/NZD) as Aussie Sentiment Increases

Australian Dollar Climbs versus New Zealand Dollar (AUD/NZD) as ‘Aussie’ Sentiment Increases

The Australian Dollar recorded gains against the New Zealand Dollar on Friday after a weaker US Dollar emerged in the market. The Australian Dollar was granted the opportunity to recover some strength when US sales figures showed a decline in the sector rather than an increase as expected. Strategist Kymberly Martin stated: ‘The Australian Dollar’s had a bit of a move higher overnight. Broadly, it’s been a beneficiary of a weaker US Dollar. That was really cemented by US retail sales number. It was quite disappointing, relative to expectation, and as a result of that, it drove the US Dollar lower, really across the board.’

The New Zealand Dollar jumped earlier in the week when the Reserve Bank of New Zealand announced it was not only keeping interest rates on hold at 3.50%, but that it would endeavour to do so for the next two years. The central bank had undertaken a period of aggressive rate hiking last year as New Zealand’s economic recovery continued strongly. However, despite the central bank previously suggesting it would begin hiking rates again in the near future, it’s now offering a period of stability—a favourable development since many institutions are cutting rates. Industry expert Imre Speizer commented: ‘The whole MPS was not as dovish as expected, and all the speculative bets for the ‘Kiwi’ to fall were wrong, so they bought them back in a hurry. That’s what caused the very sharp one-and-a-half cent bounce yesterday, but today’s just been sideways.’

The New Zealand Performance of Manufacturing Index recorded gains in February when it climbed from 50.7 to 55.9. One expert, Catherine Beard, stated: ‘After the January results that showed lacklustre expansion, the increase in February was more in line with what we’ve seen over the last two years. Although all sub-indexes were positive, the fact that new orders recovered to show its highest value for over a year should glow through into PMI results in the coming months.’

Meanwhile, the Australian Dollar was supported earlier in the week when Australian Employment Change showed 15.6K jobs had been created in February, allowing the Unemployment Rate to drop down to 6.3% to 6.4%. However, economists noted that the Participation Rate had also declined from 64.7% to 64.6%. With no further data released for either of the Trans Tasman nations this week, the ‘Aussie’ and the ‘Kiwi’ will be extremely sensitive to any global developments as well as any highly influential data from other economies.

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