Daily currency update courtesy of Halo financial

(Catharine Higginson) #1

Well done to the New Zealand Woman's rugby team the Black Ferns for doing what their male conterparts the All Blacks have struggled with when they won their fourth consecutive Rugby World Cup yesterday narrowly beating England 13-10 at "The Stoop".

Much stronger than expected US July nonfarm payrolls data released on Friday has shaken the view of doom mongers that the US was heading for a double-dip recession. Asian stock markets are up this morning as risk aversion subsides.

Also shaken was my hometown of Christchurch, New Zealand’s second largest city which was struck by a magnitude 7.1 earthquake in the early hours of Saturday morning. It was a miracle that no one was killed given the destruction the quake left behind. 50% of chimneys in the city are down and 20% of homes have been left uninhabitable. The Kiwi dollar is stronger after an initial sell-off as is the NZX 50 stock index which has since rallied strongly buoyed by a rise in building and construction stocks. The earthquake is forecast to cost the economy NZ$2bn but as this will take the form of increased construction activity and is likely to boost growth and inflation, this has pushed the Kiwi dollar higher.

Today is a bank holiday in the US and Canada for Labor Day, so data is very thin on the ground until midnight tonight when the British Retail Consortium sales monitor figure is released. Four hours after that the Reserve Bank of Australia is forecast to leave interest rates on hold at 4.50% when they make their announcement.

On Wednesday the Bank of Canada is expected to raise interest rates to 1.00%, although economists are split 65% to 35% in favour of a rate hike, so it’s certainly not a done deal.

The Bank of England is expected to leave interest rates and Quantative Easing (QE) on hold at 0.50% and £200bn respectively when they meet on Thursday. Of more interest will be the minutes from the Bank of England later in the month which could show the Monetary Policy Committee voted in a three-way split.

And to complete a full house of interest rate movements the South African Reserve Bank is expected to cut interest rates from 6.50% to 6.00% when they meet on Thursday.

The “Commodity currencies” (AUD, CAD and NZD) are stronger on rumours that China were looking to diversify some of its foreign reserve holdings from US dollars, Euro, Japanese Yen and sterling into these currency pairs.

Have a good day.