New Zealand Dollar (NZD) Exchange Rate Outlook Steady on Mixed Dairy Auction Results

September 21, 2016 - Written by Ben Hughes

STORY LINK New Zealand Dollar (NZD) Exchange Rate Outlook Steady on Mixed Dairy Auction Results

Dairy Auction Result Triggers Pound Sterling to New Zealand Dollar (GBP NZD) Exchange Rate Fluctuations

The Pound Sterling to New Zealand Dollar (GBP NZD) exchange rate fluctuated over the course of Tuesday's European session.

Yesterday’s session yielded the latest fortnightly GlobalDairyTrade auction results and they proved to be a Curate’s Egg as far as investors with an interest in New Zealand Dollar (currency : NZD) exchange rates were concerned.

On a quick look, the results offered some grounds for encouragement, with the average hammer price increasing by a healthy 1.7% from the last auction result. However, drilling down into the numbers, analysts noted that the hammer price for New Zealand’s number one export – Whole Milk Powder (WMP) - had edged lower by 0.2%.

New Zealand Dollar Gives Up Earlier Gains, GBP NZD Hits High of 1.77

Support for the New Zealand Dollar ebbed as a result and the gains which the NZD had recorded against Sterling earlier in the day were partially erased, sending the GBP NZD exchange rate up from an intraday low of 1.7608 to a distinctly more respectable 1.7720 at the time Europe’s equities markets closed. The short-to-medium term performance of the New Zealand Dollar is expected to be driven by the tone and content of the report which accompanies tonight’s Reserve Bank of New Zealand (RBNZ) monetary policy announcement.

Downbeat US Data Boosts Higher Risk Currencies Like the New Zealand Dollar and Australian Dollar

Later in the session less-than-impressive ecostats from the US weighed on Federal Reserve interest rate hike expectations and sent the Pound Sterling to New Zealand Dollar (GBP NZD) exchange rate lower once more.

Elsewhere, yesterday’s afternoon session was also notable for more downbeat data from the USA; this time it was America’s housing sector which was providing the cause for concern. The August Housing Starts figure proved particularly worrisome, revealing a much larger than anticipated 5.8% dip in the number of construction projects commenced in comparison to the previous month.

August’s US Building Permits figure, published at the same time, also pointed to a contraction in the number of early stage projects being instigated. These leading indicators of a slowing housing market Stateside could be enough, given the tame US jobs numbers of recent months, for the Federal Reserve’s policymakers to decide against any tightening of monetary policy at tonight’s announcement.

As of yesterday evening, futures markets were pricing in a relatively slim 18% chance that the Fed will hike America’s cost of borrowing tonight. If they are proved correct and the Fed maintains US interest rates at their current banding of 25 – 50 basis points, then analysts forecast that the US Dollar (currency : USD) may go into reverse.

Such a result would also be New Zealand Dollar supportive, so we may see the GBP NZD currency pair hit new lows.

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: Currency Predictions Pound New Zealand Dollar Forecasts Po Forecasts