Daily Economic Commentary: New Zealand

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Daily Economic Round Up of data from New Zealand!

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The “Kiwi’s” gain yesterday was more exaggerated as it blew past previous week’s high and the significant 0.6500 price level yesterday. Positive economic data that came out of New Zealand helped immensely. Its trade balance printed a whopping 858 million dollar surplus, more than three times the 280 million dollar surplus initially predicted.

Later at 5 am GMT, National Bank of New Zealand will release its report on business confidence. The report attempts to predict the direction of the economy for the next 12 months. It does this by surveying manufacturers, builders, retailers, agricultural firms and service provides whether or not they are optimistic about the economy. A reading above baseline zero means they are more optimistic than the economy than they are pessimistic.

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No economic reports were released from New Zealand yesterday. The NZD/USD began the day by making headway towards higher highs but found itself sliding down as the US released worse-than-expected consumer confidence data. The pair broke below the psychologically significant 1.6500 level and found some support around the 1.6450 area.

Data on commodity prices, as measured by Australia and New Zealand Banking Group, are due at 11:00pm GMT today. Although no forecasts have been given, Australia will be releasing its data on commodity prices and we can expect New Zealand’s data to follow suit.

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The NZD moved lower against the other currency big boys with the resurgence of some risk aversion in the capitals markets. Trading of the NZD, however, was still confined within its daily range.

New Zealand saw an action packed session yesterday. Sike! No economic reports were actually released. The NZD just followed leads from the other majors regarding its movement yesterday.

Today (1:30 am GMT), the Australia and New Zealand banking group will release its latest commodity prices. Yesterday, the prices of Australian commodities fell further by 29.3% after falling by 23.4% during the previous period. We might see a similar decline in New Zealand’s account given this. The ANZ commodity price index in May registered a 2.7% increase. Commodities are one of the major exports of New Zealand. Hence, any decline in prices may weigh down on its economy and the NZD.

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The NZD took a solid beating from the USD once again yesterday as it fell almost 150 pips from its Asian open price. Support at 0.6400, a key technical and psychological support level failed to hold as sellers took the pair all the way back down, just a few pips shy last week’s low. Risk aversion, as usual, was the culprit!

The Australia and New Zealand banking group released its commodity price index also yesterday. It sang the same tune as the Australia’s commodity price index when it printed a measly 0.2% increase in prices for June. This was a stark contrast from the 2.4% increase we saw last reporting period.

Nothing on New Zealand’s economic cupboard... And with US on vacation mode, we might see thinner than usual liquidity today. Enjoy the weekend folks!

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The Kiwi posted some small gains against the USD after 3 consecutive days of losses. The NZD had fallen over 250 pips from the weekly high as the dollar rallied throughout the week.

A government report released over the weekend showed that housing prices rose by 0.4% in the last quarter, the first increase in 6 quarters. It appears the RBNZ’s rate cuts are having a positive effect on the market as they allow consumers to have lower mortgage rates.

Today, the NZIER Business Confidence report will be released at 10:00 pm GMT. This index surveys manufacturers, retailers, wholesalers and service providers on current economin conditions. As of now, there are no forecasts as to what level the index will have. The previous release had a reading of -65. Note that scores below 0 indicate pessimism and that this is a high-impact report. There could be extra volatility around the time of it's release.

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The NZD appeared unfazed by the risk-aversion-propelled USD rally. After sliding below the 0.6300 mark, the NZD/USD staged a slow but steady climb close to the 0.6400 level. An improvement in business confidence in New Zealand rendered the NZD as the best-performing currency yesterday.

The business confidence index, as reported by the New Zealand Institute of Economic Research or NZIER, leapt from -65 to -25. This indicates that only 25%, compared with the previous 65%, of the companies included in the survey expect economic conditions to worsen in the next six months. Overall, New Zealand businesses are less pessimistic about company earnings and the economic outlook.

The nation's economic calendar is report-free until the end of the week but stay on your toes because commodity price rallies and changes in risk sentiment could bring some surprises for this comdoll!

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The NZD lost its flavor against the other ‘candies’ as market participants switched on their ‘bitter mode’ during the US session. It erased its early gains and lost 75 pips against the greenback to close to 0.6294.

No economic reports were due in New Zealand yesterday. Today will be quiet as well. The NZD’s movement today may just be influenced by the market participants’ sentiment in the US market. A dash of hope would be good for the NZD.

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The NZD wasn’t spared by sellers as well. During the US session alone, the NZD tumbled down almost 100 pips versus the USD! With an empty economic calendar, it seems like the move was primarily caused by the dominating sentiment of aversion to risk. If this sentiment persists, we could see the NZD’s value to diminish further.

Today will be another uneventful day for New Zealand. It has nothing on its economic bag and the next economic data set for release, the country’s figure on retail sales (both core and headline), won’t be until Sunday. Expect the currency's price action to be largely determined by risk appetite. And with the G8 meetings underway, it'd be best to stay sharp and alert for any shift in sentiment!

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ZZZZZZZ.... oh sorry, is it Friday already? It’s been a slow week for New Zealand, which only had one economic report that came out. As expected, NZD trading was largely affected by risk sentiment. Yesterday we saw the USD drop, which caused the NZDUSD pair to close higher. Is there a shift in risk assessment? Or is it merely a retracement?

Next week should be a little more interesting on the New Zealand front, with retail sales data coming out late on Sunday, and inflation (CPI report) due on Wednesday.