The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate fell on Monday after the New Zealand Performance of Services Index climbed to a six-month high of 57.8 in January.
Economist Craig Ebert commented: ‘The relative health in the latest PSI gels well with a burgeoning labour market, high net inward migration and a reheating housing market. It’s a big relief to see the PSI get even stronger in January, compared to the abrupt slowing of its manufacturing cousin the PMI.’
In addition, New Zealand’s Retail Sales jumped from 1.6% to 1.7% quarter-on-quarter in the final three months of 2014. As a result, the New Zealand Dollar rallied to a three-week high versus other currency majors such as the US Dollar (NZD/USD), regaining losses from the recent weaker-than-forecast inflation report.
However, the ‘Kiwi’ exchange rate surge won’t be viewed positively by the Reserve Bank of New Zealand (RBNZ) which believes that the New Zealand Dollar is still overvalued.
RBNZ Governor Graeme Wheeler has previously stated: ‘While the New Zealand Dollar has eased recently, we believe the exchange rate remains unjustified in terms of New Zealand’s long-term economic fundamentals. We expect to see a further significant depreciation.’
Meanwhile, the Australian Dollar was battered lower as speculation regarding a Reserve Bank of Australia (RBA) rate cut heightened.
Tuesday will see the RBA release its most recent meeting minutes and could be an event that sees significant Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate fluctuations.
Economist David Bassanese commented: ‘The RBA has demonstrated its concern with economic growth. It doesn’t see much of an economic upturn and I think in the next few months it will continue to be disappointed and they will have to keep cutting.’
‘Europe and the United States and Japan are all effectively zero, so we still have a long way to go to match them.’
Both Australian and New Zealand domestic data will be thin on the ground this week, lending a lot of Oceanic currency movement to global developments and any changes in commodity prices.
However, the ‘Aussie’ is likely to swing against other major currency peers on Tuesday as the RBA meeting minutes come under close scrutiny.
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is presently trading at 1.0360. The New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate is trending in the region of 0.9660.
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