The NZDUSD is currently trading at 0.6714
The pound hit its lowest level against the dollar in almost seven years on concerns about a possible UK exit from the European Union. The move follows London Mayor Boris Johnson joining the campaign to leave the EU after Prime Minister David Cameron set a June referendum date. Against a basket of currencies the GBP is at its weakest since April 2014
So far this year, fears of a British exit from the EU - dubbed 'Brexit' - have already pushed the pound down by more than 4% against the US dollar. Many market participants believe a "Brexit" would lead to a weaker currency as worries about Britain's £229bn annual trade with the EU and the possibility of new trade barriers.
The US dollar has recently had a strong run against the euro and the Swiss franc as well as the sterling. That's partly due to the US Federal Reserve's decision to raise interest rates in December and signal that it may do again during 2016 – possibly once every quarter. At the same time the European Central Bank and the Bank of England have been sending out very dovish messages and are likely to be on hold for some time.
February data highlighted a setback for the U.S. manufacturing sector, with growth momentum slipping back again after the slight rebound seen at the start of 2016. The latest survey pointed to the weakest overall improvement in business conditions for just over three years. At 51.0 in February, down from 52.4 in January, the seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) was also at its joint lowest level since September 2009.
Global equity markets are broadly higher: Dow +1.46%, S&P 500 +1.29%, FTSE +1.47%, DAX +1.98%, CAC +1.79%, Nikkei +0.9%, Shanghai +2.35%.
Gold prices are down 1.2% currently trading at $1210 an ounce. WTI Crude Oil is up a substantial 7.7% currently trading at $31.91 a barrel.
Current indicative rates:
NZDUSD 0.6714 1.1%
NZDEUR 0.6096 2.1%
NZDGBP 0.4746 1.9%
NZDJPY 75.92 1.8%
NZDAUD 0.9281 -0.1%
NZDCAD 0.9198 0.6%
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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here »
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