The New Zealand dollar sank on Monday morning against the other FX majors amid uncertainty over New Zealand’s future government and on the back of a continuation in weak sales data.
Advanced voting in New Zealand’s general election begins on Monday, ahead of election day on September 23rd, and while polls indicate no clear favourite, the latest poll does finally place Labour ahead of the incumbent National Party by a margin of 4 points (43 to 39).
Labour has achieved a remarkable turnaround in public opinion towards it since Jacinda Ardern replaced Andrew Little as party leader on August 1st. Polls in July had placed Labour support in the mid-20s, indicating that another miserable result for the party was likely on election night. In 2014, the centre-right National Party won its third term in government, securing an outright majority in the process.
In economic news, StatsNZ said today that card-based retail sales (credit, debit and other charge cards) fell in the month of August by 0.2%. Card sales in New Zealand have now declined for four consecutive months and have continually fallen below analyst estimates. Prior to the release, August sales had been expected to rise by 0.5%.
NZD Exchange Rates
With the exception of the US dollar, which itself suffers from considerable uncertainty in the wake of Hurricane Irma, the New Zealand dollar has fallen on Monday morning towards the very bottom of its recent ranges against all G10 currencies.
The British pound is leading the way in battering the kiwi. NZD/GBP’s fall in recent hours to £0.5475 marked a three-month low.
Against the euro, the kiwi has spent two weeks hovering above big support at €0.6 and remains, as of writing, just 15-20 pips above that. A move below the level – possible with the slightest of nudges – would take NZD/EUR to a fifteen-month low.
Against the Australian dollar, New Zealand’s currency continues its September battle with the A$0.9 handle. NZD/AUD closed below the level on September 1st, 6th and 7th, but saw fightbacks above it on dates in between. At Monday’s exchange rate of A$0.8992, NZD/AUD remains within a whisker of last week’s sixteen-month low of A$0.8975.
Against the US dollar, the kiwi has retraced all of Friday’s rally and when last seen was buying $0.7237. NZD/USD remains in the bottom third of its July-September range.
The New Zealand dollar is likely to remain under pressure throughout September according to ANZ economist Con Williams, who told the New Zealand Herald this weekend that “general election jitters…combined with further softening in house prices and dairy future prices, will cap NZD.”
For the rest of the week, the economic calendar for New Zealand is especially light, with the only potentially impactful data coming on Friday in the form of the Business Manufacturing Index for August. The index measures the activity of purchasing managers in New Zealand’s manufacturing sector, with readings above 50.0 indicating sector expansion. In July, the BMI fell to 55.4, from 56.2 in June and 58.5 in May.
As always, readers can get their hands on New Zealand dollars at better exchange rates than those on offer at the banks and airport money changers by using BER’s comparison calculators for NZD travel cash and NZD foreign currency transfers.