Pound New Zealand Dollar Exchange Rate (GBP NZD) Improves Following Weak NZ Trade Data

Published: Wednesday, 27 February 2013 15:00 BST - Written by John Cameron

STORY LINK Pound New Zealand Dollar Exchange Rate (GBP NZD) Improves Following Weak NZ Trade Data

Yesterday afternoon’s comments from Federal Reserve Chairman Ben Bernanke served to steady the frayed nerves of equities investors who had taken last week’s Fed minutes as a sign that the US central bank was about to end it Quantitative Easing programme. Bernanke told the Senate Banking Committee that the Federal Reserve felt that its ongoing extraordinary monetary policy measures, which include its controversial QE programme, are working well. The market took these comments as a tacit indication that the Fed will be continuing with QE in the short-to-medium-term, at least.

Yesterday afternoon’s US New Home Sales data for January showed a healthy increase of 15.6% - far higher than the expected 3.0% level. The encouraging print, in combination with Bernanke’s words, sent global stocks higher once more following the pronounced dip which they suffered followed the inconclusive result in Italy’s weekend general election.

Initially, the return to ‘risk on’ trading late yesterday caused the New Zealand Dollar to register healthy gains. However, these gains were reversed during the overnight Asian session, with the release of January’s domestic New Zealand import/export figures. The trade data revealed a surprise trade gap of NZ$305m in January, against expectations of a trade surplus of NZ$125m. The news came as a real blow to investors holding ‘Kiwi’-denominated assets thanks to New Zealand’s heavy dependence on the export of its plentiful raw materials. Hopes had been high for the figure, partly thanks to last week’s Japanese trade data, which showed a record trade gap for Asia’s second economy, largely due to a spiralling level of imports into Japan. Ordinarily, this would be good news for New Zealand, as Japan represents one of the Antipodean nation’s primary export markets.

The overnight release has sent the Pound New Zealand Dollar exchange rate (currency : GBP NZD) to its highest level since February 13th at 1.8435. Monday’s multi-decade low of 1.7958 for the pair now looks to have been rejected, for the time-being at least.

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