The New Zealand dollar weakened yesterday following comments from the Governor of the Reserve Bank of New Zealand, Graeme Wheeler. Wheeler stated that the central bank may have to resort to selling off the currency should it continue to be unresponsive to worsening fundamentals. Worse-than-forecast employment figures released overnight on Tuesday failed to impact the currency negatively – policy-makers believe the New Zealand dollar to be overvalued. An overvalued currency can have a significantly negative impact on an export-reliant economy such as New Zealand’s, and the central bank is struggling to keep the value down.
The Japanese yen gained yesterday after a slump in the Japanese stock market saw traders’ demand for safe-haven assets increase. Traditionally we have seen an inverse correlation between the Japanese stock market and the yen, with decreasing demand for Japanese stocks triggering a heightened demand for the historically safe currency. Lastly, we saw the Canadian dollar fluctuate in the currency markets, losing ground at midday following worse-than-forecast building permits data before regaining some of the lost ground against sterling as the afternoon went on. Overnight last night we had unemployment figures from Australia beat expectations which saw the Australian dollar gain over a cent against sterling. Later today we have trade balance figures out of China.
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