New Zealand Dollar gains on US Dollar, Euro. NZD/GBP Declines

At the close of last week higher-risk currencies like the New Zealand Dollar gained as the Greek request for a four-month extension of its current bailout programme reduced the odds of a ‘Grexit’ occurring in the near future. The ‘Kiwi’ was also supported against several of its most-traded currency counterparts as economic data for New Zealand printed above expected levels during the local session. New Zealand’s Credit Card Spending report showed a 1.9% increase in spending in January on a month-on-month basis. The annual figure increased from 4.5% to 6.2%. The New Zealand Dollar to US Dollar exchange rate was trading 0.2% higher during the European session, while the New Zealand Dollar to Euro (NZD/EUR) exchange rate climbed 0.5% as investors remained concerned over the Greek debt situation.

However, the New Zealand Dollar to US Dollar (GBP/NZD) currency pair trimmed its advance ahead of a testimony scheduled to be given by Federal Reserve Chairman Janet Yellen. If the central bank chief intimates that interest rates will start being increased towards the middle of this year, the US Dollar could post widespread gains. According to currency strategist Raiko Shareef; ‘On a fundamental basis, the positive beat in New Zealand data is unlikely to support further [Kiwi] upside. The broader picture is still one of a country that has reached its cyclical peak.’ Shareef also spoke on the subject of dairy prices, asserting; ‘Keep in mind that part of the increase in prices is because of the drought conditions in NZ. In real GDP terms, this will be an unambiguous negative for NZ.’

In the week ahead the only economic reports from New Zealand with the potential to spark ‘Kiwi’ movement are the nation’s Reserve Bank of New Zealand 2-Year Inflation Expectation figure, trade balance numbers and building permits stats. Chinese data and movement in the commodities market may also have an impact on New Zealand Dollar trading.