The Australian dollar last week showed that just because a currency goes down against one or two other currencies, it will not necessarily go down against them all. What I am speaking about is the weakness that the Aussie experienced against the Pound and the U S Dollar mid week but the strong rally it enjoyed compared to the Kiwi Dollar. We wrote about this strength the Australian Dollar experienced against the N.Z Dollar last week. A lot of the good news out of New Zealand is already factored into the exchange rate , as is the potential for another three rate hikes over the remainder of 2014 , so any disappointment in economic data and we could see the Aussie gain ground .
And this is what we saw; N.Z CPI was much weaker than expected, arguing for a pause in rate hikes and a selloff in the Kiwi. Further abroad we saw event risk take a back seat to a tragedy unfold in the Ukraine with the shooting down of Malaysian flight MH17 by Russian separatists .This caused a flight to safety by investors with Gold rallying by nearly 15 U.S dollars an ounce and the U.s Dollar having one of its better days.
Euro zone CPI or inflation came in line with expectations with continued signs that the Euro zone is stabilising, and UK CPI beat expectations giving more fuel to the expectation that we may see Mark Carney raising interest rates later in the year. We kick off this week with a very light calendar with NZ credit card spending being released across the Tasman then some data out of Germany with Producer Prices out later tonight .Things start to heat up tomorrow night with U.S Consumer Price Index with analysts looking for inflation to come in at 2.1% which could see the U.S Dollar rally if we see a reading higher this.