Australian Dollar to New Zealand Dollar Softer

May 17, 2015 - Written by James Fuller

STORY LINK Australian Dollar to New Zealand Dollar Softer

Australian Dollar to New Zealand Dollar Softer

The Australian Dollar to New Zealand Dollar exchange rate softened on Friday as the ‘Kiwi’ continued to receive support from the release of better than forecast retails sales data released earlier in the week and as ‘Aussie’ was weighed upon by falling iron ore prices and improved sentiment towards the US Dollar.

Earlier in the week, the New Zealand Dollar strengthened as data released by the New Zealand statistics bureau showed that retail sales in the country grew by the fastest pace since 2003 in the first quarter of 2015. Total retail sales volume surged by a record 2.7%, a sharp rise from the previous figure of 1.9% and was far better than the 1.5% rise forecast by economists. Stripping out volatile vehicle sales, retail sales surged by 2.9% as sales of electrical and electronic goods rose by 8.9%.

‘Our discussions with retailers suggest that there’s no one thing in particular behind this, but there may be a strengthening back-to-school effect. This seems to mean that spending on things like laptops and tablets is having an impact on overall spending at the start of the school year,’ said Tehseen Islam from Stats NZ.

The positivity generated by the retail sales figures was knocked slightly by the release of separate data which showed that New Zealand’s manufacturing sector continued to expand albeit at a slower than expected rate. The BNZ-Business NZ seasonally adjusted manufacturing index dropped to 51.8 in April, 2.8 points lower than a month earlier. In a PMI, a reading above 50 indicates expansion whilst one below indicates contraction.

As the week progressed, the Australian Dollar came under pressure from falling iron ore prices and concerns over the strength of the global economy. Soft data out of China, Australia’s biggest trading partner did little to ease those concerns.
Iron ore prices were sliding back towards the $60 per tonne mark after a losing streak extended to three sessions. The drop in prices has been driven by renewed oversupply worries. Suspicions that two of the world’s major iron ore mining companies are colluding to drive prices down, prompted Australian Prime Minister Tony Abbot to announce that he backed the implementation of an inquiry into the price falls. Mr Abbott's comments come after Independent senator Nick Xenophon failed to win support for an inquiry on Thursday.

The ‘Aussie’ was also softened by improved sentiment towards the US Dollar following the release of a better-than-forecast US jobless claims report.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Australian Dollar Forecasts Currency Predictions Daily Cur Forecasts