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Weekly roundup: Geopolitical tensions continue to weigh on AUD and NZD

currency-newsWeekly roundup: Geopolitical tensions continue to weigh on AUD and NZD
A fluctuating US dollar and strained tensions between the US and North Korea saw AUD and NZD on volatile form last week. GBP/AUD settled around opening levels at AU$1.6250 after a volatile week, while GBP/NZD had climbed to NZ$1.8099.

The Australian dollar and New Zealand dollar were pushed higher towards the beginning of last week as risk appetite began to return to the markets. Tensions between the United States and North Korea had abated slightly, giving investors the confidence to return to the risky antipodean assets. A rise in the weekly ANZ Roy Morgan Australian consumer confidence index also provided support for AUD.

The strong US data caused problems for the Australian dollar and New Zealand dollar on Wednesday. AUD was also pushed lower by a sharp decline in building approvals during July; although better-than-forecast, a drop of -13.9% was nothing to celebrate. Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler commented that a weaker NZD would be more helpful to the economy, which unsurprisingly sparked a sell-off.
The Australian dollar was left muted on Thursday by the latest private sector credit figures, which showed businesses had eased back on their borrowing in July. This could suggest that the private sector is losing confidence in Australia’s economic outlook.

Meanwhile, the New Zealand dollar fell after a new election poll showed that the Labour party had greater support amongst voters than the incumbent National Party; the first time this has happened in 12 years. The possibility for the upcoming vote to significantly shake up New Zealand’s government – and therefore its economic and fiscal policies – unsettled NZD.

A solid rise in the latest manufacturing PMI boosted the Australian dollar on Friday, which also pressed higher on the back of US dollar weakness. The New Zealand dollar didn’t find any support from the latest New Zealand data, which showed that the nation’s profits on exports were falling due to an increase in import costs.
It will be an important week for the Australian interest rate outlook this week, with the Reserve Bank of Australia (RBA) announcing the latest interest rate decision tomorrow and Governor Philip Lowe expected to speak later the same day and again on Friday.

The New Zealand data calendar is much quieter, but tomorrow’s results of the Global Dairy Trade auction could create some NZD turbulence.
 
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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