NZD Update.

The New Zealand Dollar managed to maintain its ground against many of its pairings over the past week largely due to the continuing improvement of the domestic data in NZ. Last week’s Fonterra 2010/11 dairy payout forecast put the figure at 50 cents higher than the current season ($6.90 - $7.10 / kg ms). Similarly April’s Merchandise trade figures were up on the month prior and showed the first annual trade surplus since mid 2002.

SNZ Building consent figures showed that improvements in construction sector activity were continuing but the figures are still low so there is plenty of room for further improvement.

On a less positive note yesterdays National Bank Business outlook for May dropped a fraction (48.2 compared to 49.5 for April) which is disappointing but we should see an improvement in the June figures given the release of Fonterra’s positive outlook.

The remaining data for NZ this week should, like most of the recent domestic data, prove to be on the up, but nothing to get carried away with. Wednesday has Fonterra’s online auction for June as well as ANZ’s Commodity Price Index (May), and Friday has the SNZ Wholesale Trade Survey Q1.

For movement to the NZ Dollar over the coming week we will be looking to the outcome of the interest rate decisions in Australia and Canada (released on Tues 1st June) and the US’s Non Farm Payroll data (out on Friday 4th June). The RBNZ meet next week to decide on the OCR and both Australia’s and Canada’s decisions will be watched carefully seeing as they are the NZ Dollars commodity currency brethren. The RBA are expected to hold whereas many analysts have priced in a hike for the Bank of Canada. Should Canada hike then the expectation for the RBNZ to follow suit could rise.

Sterling continues to be unable to make any ground on NZD falling back from the GBPNZD 2.16’s in the middle of last week to the GBPNZD 2.12’s at the outset of this week.

Having sat above NZDUSD 0.70 for a while the NZDUSD pairing is now in a tight range between 0.66 and 0.70 which is probably viewed as slightly more fair value than the higher levels. Having tested the lower level of the range mid last week the NZD has fought back and now sits around NZDUSD 0.68 at the time of writing.

Like the above two pairings not a huge amount of movement occurred for EURNZD over the past week and the movement that did occur was like a drunken stagger rather than a positive move in one direction favouring either currency. By and large though the NZD made small gains having been supported by its domestic data, moving from EURNZD 1.8330 mid last week down to 1.8050 where it currently sits.