Pound Sterling vs NZ Dollar: NZD Fails to Advances Despite House Price Data, AUD/NZD Turns Bullish

By Will Peters

The New Zealand dollar (NZD) fails to advance against the pound sterling despite news that house prices continue their rampant ascent.

In late morning trade in London we see the pound sterling to New Zealand dollar (GBP/NZD) exchange rate is trading 0.2 pct higher on a day-to-day basis at 1.9836.

(Note: All NZD quotes here refer to the wholesale spot market. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.)

The NZ dollar failed to find any significant support on news that New Zealand house prices are still rising.

In spite of the measures taken by the RBNZ to limit rising house prices, QV data has shown national house values rose by 9.6% annually, whilst Auckland’s rose by 14.5%.

"This has put some more pressure on the central bank to act, which has in turn spurred further speculation that the RBNZ will hike interest rates in March," suggests Sasha Nugent at Caxton FX. "For now however, news about Toyota’s exit from Australia is affecting the kiwi and sterling is directing the rate higher. We expect levels will remain above 1.98."

Weighing on the NZ dollar exchange rate complex today is the same problem that has befallen the Australian dollar.

Both antipodean currencies have today suffered after it was shown that the Chinese central bank showed that the flow of easy money to the economy would likely ease.

China's central bank signalled that volatility in interest rates would continue and cost of borrowing would rise.

In a strongly worded statement, the PBoC said “When the valve of liquidity starts to tame and curb excessive credit expansion, money-market rates, or the cost of liquidity, will reflect that.”

With concerns over Chinese growth lingering in the background we would expect the NZ dollar to see bouts of weakness.

NZ dollar vs Aus dollar update

Sean Lee at FXWW updates us on price action in the AUD/NZD pairing:

"Price rallied early last week and triggered a new TS signal that put an end to the possible bearish H&S pattern! Some choppiness set in but then price rallied again on Friday triggering another TS signal on my final candle for the week. Price is back to trading above the 0.82 level.

"Price is now trading above the Ichimoku Cloud on the 4hr and in the top of the Cloud on the daily chart which suggests choppiness but with a bullish bias. There was a bullish Tenkan/Kijun cross on the 4hr chart here too during last week and, like with the A/J and Cable, this cross evolved below the 4hr Cloud and so is deemed a ‘weak’ signal. The weekly candle closed as a large bullish candle."

FX Markets: Euro trades higher

It has been a subdued start to the week for foreign exchange markets, however the euro has provided some entertainment.

The EUR/USD traded higher to take out the stops at the 1.3650 level, but its rally stalled by mid morning London dealing.

The news out of the Eurozone remains problematic with today misses in both French and Italian Industrial Production numbers.

French IP printed at -0.3% versus -0.1% while Italian data missed markedly coming in at -0.9% versus 0.0% forecast.

"With the exception of Germany, manufacturing in the in region remains depressed and the higher value of the euro is not helping matters. Today the French Industry minister Montenbourg called on officials to lower the exchange rate, but so far such pleas have fallen in deaf ears at ECB," says Boris Schlossberg at BK Asset Management.