World First NZD November Update

New Zealand Data:
The stronger 3rd Quarter retail sales figures for New Zealand released early in November were boosted by households bringing forward their purchases of higher price items to beat the GST increase. Subsequently it is fair to assume we will see a small dip in sales in this area over the coming month or two.

RBNZ Governor Bollard re-iterated the ‘slow and steady’ approach to New Zealand’s economic recovery in his mid November speech.

Commodity export prices remain at high levels and that is currently lending support to the New Zealand Dollar.

Currency:
The NZ Dollars movements are being largely dictated by offshore activity. As ever China and the US are playing their part, along with the European sovereign debt problems that have risen to the surface again.

US data is proving something of a mixed bag of late and therefore the NZ Dollar is tenuously holding on to the ground gained over the past months against the US Dollar. China is also playing its part in the NZDUSD movement as there is speculation amongst economic markets that the PBOC (Peoples Bank of China) will raise interest rates shortly which could increase risk aversion heralding a sell-off of the NZ Dollar.

Ireland has requested financial assistance and the EU/IMF will oblige, however focus and concern is now firmly back on the other PIGS (Portugal, Greece and Spain) as they similarly struggle to fight their debt battles. Subsequently the Euro is coming under pressure.

GBPNZD - Started the month at GBPNZD 2.095 and the NZ Dollar has maintained its strength throughout November keeping the rate below the 2.1 level.

EURNZD – Trading at EURNZD 1.8200 at the start of November and has since fallen down to the EURNZD 1.75 – 1.76 level following the re-emergence of the sovereign debt problems in Europe.

NZDUSD – Peaked just below NZDUSD 0.80 early November and has since fallen to 0.75 off the back of slightly stronger US data and some risk aversion in the wake of North Korea’s ‘bombing practice’ and speculation on China raising interest rates.