New Zealand dollar and Canadian dollar weaken as investors push back bets on rate hikes

The New Zealand dollar lost out yesterday amid speculation that the central bank will delay a hike in interest rates. The New Zealand economy has been gaining momentum since the start of this year, which sparked expectation that we could see an interest rates rise coming months – an expectation that had been somewhat priced into the market. Inflation figures yesterday, however, came in below forecast, which triggered speculation that the central bank will not look to hike rates so soon. As a result the Antipodean currency dropped against all of its 31 most-traded peers.

The Canadian dollar suffered yesterday as the Governor of the Bank of Canada lowered growth forecasts for the country following the central bank’s decision to keep interest rates on hold. Resultantly, the Canadian dollar weakened as investors pushed back bets on when they expect the central bank to raise interest rates. On a more positive note, manufacturing sales figures came out better than expected.

Elsewhere the global market took some confidence from the release of better than expected data from China, with second quarter figures showing that the World’s Second largest economy grew by 7.5%, whilst monthly Industrial Production also increased by 9.2%. Positive data out of China tend to have a wide impact on the global market, particularly with emerging-market or commodity-back economies.

A quiet day on the data-front today will leave markets susceptible to external factors.

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