June 1, 2010
The Kiwis may be confident, but the skittish market need more convincing as the Kiwi finished slightly lower against the dollar and the yen at 0.6767 and 61.77 respectively despite companies being at their highest spirits since May 1999.
Here's a little more in depth look at the the New Zealand Business Confidence survey released yesterday. The report revealed that 48.2% of the companies expect the general economy to improve, down from the previous 49.5% figure. The overall figure might be a bit of a disappointment, but the survey also showed 45.3% of companies are more confident on their sales and profits, marking the highest percentage in 11 years. This could mean more investments and employment for the economy, creating a pressure for the interest rate to rise.
The Reserve Bank of New Zealand is scheduled to release their monetary policy statement on June 10. Analysts expect the rate to rise by 25 basis points. Will the bank give in to the pressure? We’ll know next week! Meanwhile, let’s watch for the Australia and New Zealand Commodity Prices is published tomorrow at 3:00 am GMT. Since exports make up a significant chunk of New Zealand's economy, an increase in export prices could indicate rising export demand, which would be good for the economy.
"The only cable I watch is the pound baby."