Welcome to the Pure FX account of the latest changes in the foreign exchange rates.
This is intended as a brief guide to movements in the exchange rates overnight, to put you in the best position for when you exchange currencies.
New Zealand Dollar
Here’s something you don’t see too often: upbeat economic data from the States causing the New Zealand dollar to fall. Retail sales in the US jumped 0.8% in July, ahead of forecasts for a 0.3% rise. This suggests “the U.S. economy might actually be in better shape than expected,” as Western Union Business Solutions Corporate Dealing Manager Chris Hunter notes.
Now, normally you’d expect a solid figure like that to boost the kiwi dollar, as it sets risk appetite rising. But that wasn’t the case last night, as New Zealand’s dollar lost a cent against the pound, among others. Why? Because solid retail sales cut the odds of the Federal Reserve injecting more stimulus into the US economy.
The foreign exchange markets had had their hopes pinned on that, aiding risk-based currencies like the kiwi because it’s equivalent to a wave of money entering the global economy (spurring upbeat all-round vibes.) But if the US is doing better than expected, well, quantitative easing 3 may not be needed. Hence the falling kiwi.
How This Affects You
The falling kiwi dollar is good news for people planning to relocate to New Zealand. It after all means that, when they exchange their pounds for New Zealand dollars, they get a higher total. That makes New Zealand property cheaper among other things, and also means their savings stretch further. This is also the case for business people planning to import New Zealand products back to the UK.
What’s Coming Up Next
Whether the New Zealand dollar stays down will depend on whether US economic data stays up. Late today, industrial production data plus the New York State Empire manufacturing index will give us a taste of that. In addition, positive UK data would help this trend too. To that end, UK unemployment figures see release this morning, as do the latest minutes from the Bank of England.
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