Here is an informative graphic with explanations for the decline/rise in the NZ$ – source BNZ.
The key points from the BNZ Financial Market Wrap are:
• Risk aversion relating to the EU debt crisis dominated markets until a late month rally.
• The tone of US data continues to improve. Suggesting the US economy has averted recession.
• In NZ, RBNZ rate cuts were priced. Declining interest rate differentials, commodity prices and risk sentiment undermined the NZD.
• The NZD’s end of month rally was driven by improving global risk appetite.
• We see further upside to NZD on improving interest rate differentials. Next week’s RBNZ meeting is a potential catalyst.