NZD Update

The Eurozones debt problems continue to be at the forefront of market news. As a result NZDUSD is beginning to move down in sync with EURUSD which can largely be put down (as way of a simple explanation) to the sheer volume of funds moving from Euro into USD off the back of a poor Euro prognosis.

A stronger USD is obviously of benefit for those that export to USD regions. An obvious example is New Zealandís dairy exporters who will be happy at the prospect of greater returns should the US dollar continue to strengthen. On the flip side any New Zealand companies exporting to Europe will be less pleased with the forecast of a weaker Euro.

This weekís NZ budget (out on Thursday) is the main event locally. It should shed a little more light on New Zealandís economy in relation to the Euro sovereign debt, and will likely point out where NZ differs. Analysts are expecting the budget to be viewed in a positive light and therefore it should be NZ dollar supportive.

Locally the data is still heading in the right direction. Last weekís BNZ Business NZ PMI for April climbed to 58.9% which is the highest level since mid 2004. The REINZ housing data for April showed house sales increased by a small amount and the retail trade figures for March were also slightly up (0.5% increase).

GBPNZD
Sterling against the NZ dollar dipped into the GBPNZD 2.04ís at the end of last week which is its lowest point for over twenty years. From the pounds perspective all eyes are on the coalition governmentís ability to pump back some positivity into the UK. Should they pull off such a demanding task then there will be some light at the end of the tunnel for Sterling.

EURNZD
Euro NZ dollar was up and down over the past week but by and large the NZD has held on to itís recent gains against the single currency. Over the past week the rate fluctuated between the 1.74ís and the 1.77ís and at the time of writing is sitting around the latter level.

NZDUSD
As already mentioned the trend over the past week has been downward for NZDUSD as the NZ dollar follows EURUSD. As the Euro loses ground to the US dollar so is the NZ dollar. Having sat above 0.70 mid last week NZDUSD is now back down in the 0.68ís.