Written by Steven Dooley and Shier Lee Lim
Aussie, kiwi lower after CPI, RBNZ
The Australian and NZ dollars were down sharply on Wednesday as lower Australian inflation and yesterday’s Reserve Bank of New Zealand decision hit the currencies.
The NZD led losses after the RBNZ held rates steady, appeared less concerned about inflation and reduced its inflation forecast with CPI now expected to peak at 5.6% rather than 5.7%.
The NZD/USD fell 1.2% to two-week lows.
In Australia, the monthly CPI inflation index remained steady at 3.4% – below the 3.6% forecast – and caused markets to speculate that the Reserve Bank of Australia was less likely to hike rates.
The AUD/USD fell 0.8% to also hit two-week lows.
GBP at one-month highs
The UK’s Lloyds’ business barometer survey conducted in January was unquestionably positive: staff levels, business confidence, economic optimism, and expectations for business activity were all higher. Although pricing expectations slightly decreased, the balance of 56 remained very high compared to previous history and was almost at its highest point (61) since 2018.
The chart below, however, shows UK CBI survey which tends to provide broader perspective across various industries and is almost ticking up higher. The GBP has been higher thanks to sticky inflation despite lackluster GDP.
Thai trade balance due
In line with a decline in the customs cleared goods trade balance to a deficit of USD2.8 billion from a surplus of USD1.0 billion and a drop in foreign tourist arrivals to 3.0 million from 3.3 million, we anticipate the current account balance to swing into a deficit of USD1.2 billion in January from a surplus of USD2.1 billion in December.
We anticipate that average expenditure and the number of Chinese visitors will continue to rise this year, particularly during the Lunar New Year vacations.
AUD, NZD plunge to bottom of range
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 26 February – 2 March
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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