On Friday, the euro again recorded close to $ 1.18 in a nervous market that, with the rising coronavirus infections, seems to be opting for less risk in favour of the dollar.
This uncertainty also falls during the holiday period and can lead to relatively solid results. Experts estimate that the dollar does not have too many options to increase further. The chairman of the Federal Reserve Jerome Powell indicated that it is too early to (partially) reverse the buy-back program. We believe that the higher inflation rate is temporary in nature and that the Fed will increase its policy interest rate by 25 basis points by the end of 2023.
On Friday, we’ll see retail sales figures of the United States in June, which is by far the most important focus. After that, the focus will shift to next Thursday when the European Central Bank comes forward with its interest rate decision.
For the New Zealand dollar, analysts expect an outperformance against the US dollar and the euro over the next 18 months. The Central bank of New Zealand announced this week to stop the additional buyout program. Investors now expect an interest rate increase of 25 basis points by the end of 2021 and a 50 percent chance of a second interest rate increase, even before this year. At the end of last week, investors thought that the central bank would not increase policy interest rates until 2022. This change has supported the New Zealand dollar.
On Friday, The New Zealand Statistical Office announced that inflation rose to 3.3 percent year-on-year over the second quarter. In the first quarter, this was 1.3 percent year-on-year. This meant that inflation was higher than the expected 2.8%. The Central bank of New Zealand, the RBNZ, aims for inflation of 1 to 3 percent. With this figure, an interest rate increase in August is close.
The relative rise of the yen and the Swiss franc is observed today. “The rise in the yen and the franc is temporary in nature. If investors start to see that the negative effects of the Delta variant in the coronavirus on the economy are mild, these coins are likely to fall again. In addition, the Bank of Japan and the Swiss National Bank are not eager to see a sharp increase in their coins. The Swiss National Bank is probably the most assertive to counter this.
Euro area exports in June were 1.5 percent lower on a monthly basis, imports 0.7 percent higher on a monthly basis. The inflation rate of the monetary union in June was 1.9 per cent, equivalent to the provisional measure.
In the United States, retail sales and business stocks are expected this afternoon in June and preliminary consumer confidence as measured by the University of Michigan in July.
For this afternoon, New York Fed chairman John Williams will be one of the speakers, alongside Fed Chairman Jerome Powell and US Treasury Secretary Janet Yellen, who will be attending a meeting of the so-called Financial Stability Oversight Council.
The euro recorded flat on Friday at $ 1,1816. The European currency recorded 0.1 percent lower at 0.8533 British pounds. The British pound rose 0.2 percent to $ 1.3847 on Friday. The currency of New Zealand rose 0.6 percent to 0.7023 US dollars. The dollar was 0.2 percent higher at 110.09 yen. The currency fell 0.4 percent compared to the Norwegian currency to 8.7908 Norwegian krone.