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Can New Zealand dollar extend gains after food price data?

business-articlesCan New Zealand dollar extend gains after food price data?
  • Stronger NZ inflationary pressure to boost New Zealand dollar rates
  • Australian dollar looks for support from consumer confidence data
  • Euro under pressure as Italian budget dispute continues
 
 
NZD exchange rates to trend higher on rising price pressure
 
As forecasts point towards an uptick in October’s New Zealand food price index this could encourage the New Zealand dollar to make further gains tonight.
 
Signs that food prices could be indicative of a wider inflationary trend within the New Zealand economy would give investors greater incentive to favour the New Zealand dollar over its rivals.
 
An increase in inflation would encourage the Reserve Bank of New Zealand (RBNZ) to maintain a neutral policy outlook, leaning further away from the prospect of an interest rate cut.
 
However, any weakening in price pressures could easily drive NZD exchange rates into a fresh slump.
 
 
Improved consumer confidence likely to boost Australian dollar
 
After Friday’s disappointing lending data the Australian dollar may find a rallying point if the latest ANZ Roy Morgan weekly consumer confidence index proves positive.
 
A fresh uptick in consumer sentiment may encourage AUD exchange rates to recover some ground overnight.
 
Any weakening in confidence, though, could see the Australian dollar extending its recent downtrend.
 
Increased market risk appetite may still offer support to AUD exchange rates in the near term, however.
 
 
Euro vulnerable to Italian budget worries
 
As the Italian government shows no signs of altering its controversial 2019 budget the appeal of the euro is likely to remain muted today.
 
With Italian officials sticking by their more optimistic 1.5% growth forecast, as opposed to the European Commission’s 1.2%, tensions look set to mount further.
 
Unless there are signs of compromise ahead of tomorrow’s resubmission deadline EUR exchange rates are likely to weaken further.
 
The prospect of increased political tensions within the Eurozone could continue to weigh on the single currency in the days ahead.
 
 
Upcoming Data:
 
Monday, 12th November 2018
21:45 NZD Food Price Index
22:30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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