Will positive data out of New Zealand boost the chances of a RBNZ rate hike later this year?

Will positive data out of New Zealand boost the chances of a RBNZ rate hike later this year?

It’s been quite a busy week already for the New Zealand Dollar after a number of key releases are out this week.

On Monday we found out that the number of new construction projects declined during June from the previous month which caused the Kiwi to sell-off somewhat.

Tonight will perhaps see the biggest price fluctuations as the Unemployment Rate and Employment Changes will be released and this could determine the monetary policy adopted by the Reserve Bank of New Zealand moving forward. Some economists are expecting to see a rate hike this year from the RBNZ so data covering the health of the employment market, inflation levels and retail sales is likely to be payed close attention to.

The next chance the RBNZ has to make amendments to the rate is on the 8th of August so with this opportunity just around the corner the data releases tonight could be even more price sensitive.

A potential downside for the NZD is the bullishness of the US Fed Reserve Bank at the moment, as its aggressive monetary policy plan is likely to negatively impact other high yielding currencies in the developed world such as Australia’s and New Zealand’s. The US now offers the highest rate of return of the major currencies and it makes sense to hold funds in a safe haven currency offering high returns. Further increments from the Fed Reserve Bank in the US would only enhance this feeling.

Those of our clients monitoring the Pound to New Zealand Dollar rate should also be weary of the expected interest rate hike from the Bank of England this week on Thursday. It’s expected to take place with over 80% probability, and if it does take place along with a bullish outlook from the BoE’s Monetary Policy Committee I would expect to the see the Pound make some strong gains.

If you would like to be kept updated regarding market movements between the Kiwi and the Pound, or another major currency for that matter, do feel free to register your interest with me by emailing me using jxw@currencies.co.uk.