After careening lower on Tuesday the pound was able to stabilise ahead of the publication of the UK’s latest retail sales figures.
Meanwhile, after a choppy week GBP/NZD continues to trade around last week’s opening levels at NZ$1.7600.
Poor data for both Australia and New Zealand saw the commodity-correlated peers starting the week largely on the decline. For Australia, it was the news that Australia’s record run of GDP growth wasn’t translating to prosperity for workers. A new report found that the Australian workforce was receiving a record low share - less than ten cents per every dollar of new GDP created. Meanwhile, unexpected declines in New Zealand card spending during May weakened NZD.
The Australian dollar continued to weaken on Tuesday, although this allowed the New Zealand dollar to post a strong recovery. Australia’s NAB business confidence index near-halved from 13 to 7, while credit card purchase figures also posted a sharp slump, boding ill for inflation.
Later in the week the New Zealand dollar was buoyed by data showing a surplus in the New Zealand current account. The first-quarter saw a surplus of NZ$0.24 billion. Even though this was just under a quarter of what was expected, the fact that the current account balance had improved by around NZ$2.75 billion to rise out of deficit was enough to shore up demand for NZD.
GDP figures weren’t so positive, however. Quarter-on-quarter GDP climbed from 0.4% to 0.5% instead of to 0.7%, while year-on-year GDP weakened unexpectedly from 2.7% to 2.5% during the first quarter.
Thursday’s Australian employment data helped put the Australian dollar back on bullish form after showing a more-than fourfold increase in the number of newly employed than forecasts had predicted. 42,000 people entered the workforce, with data also showing a huge shift from part-time to full-time work.
Data is thin on the ground for both Australia and New Zealand this week, although there are some notable developments that’ll keep both currencies volatile. Tuesday will see the release of the Reserve Bank of Australia’s (RBA) June meeting minutes and the results of the next Global Dairy Trade auction.
The Reserve Bank of New Zealand (RBNZ) will announce its next monetary policy decisions on Wednesday evening, so NZD could remain soft over the coming days as this meeting draws nearer.
Phil joined the corporate foreign exchange department in 2000, and initially worked as a Senior Executive Dealer on the private client desk. In 2007, Phil moved to the corporate dealing desk as a corporate dealer and now oversees the corporate trading desk. Phil helps to manage the trading activity of the dealing desk and also works with a portfolio of corporate clients to help with their foreign exchange and risk management needs. Phil has attained FSA approval and has completed the Certificate in International Treasury Management (CertITM).
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