The New Zealand dollar dropped below the key psychological level of 0.7400 USD during the New York session, despite a short-lived dead cat pounce above 0.7398 USD on Friday.
Headlines
Dairy Boom Bolsters Food Price Index Up 1.2% in July
Buoyed by a worldwide surge in dairy prices, New Zealand?s monthly food price index registered a 1.2 percent increase over July, a report by Statistics New Zealand indicated. The leading cause for food price inflation is a 9.6 percent monthly rise in the price for fresh milk.
http://www.stuff.co.nz/4163270a13.html
Source: Stuff.co.nz
House Price Inflation Prints at Multi-Period Record of 12.7%
Data released by Quotable Value New Zealand Ltd indicated that the growth rate of national house prices accelerated to a 15-month high in July. House price inflation printed a 12.7 percent rise from the prior year period, the steepest increase since the metric grew by 13.1 percent in April 2006. The continual surge in New Zealand?s property prices hints at the resilience of the over-heated housing sector despite anti-inflationary measures by the Reserve Bank of New Zealand. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_y1RvTN72lg
Source: Bloomberg
NZD $3.6 Billion Worth of Retail Bonds Due to Expire
The Kiwi dollar is likely to receive a further hit as NZD $3.6 billion worth of New Zealand?s global retail bonds mature later this month. The uridashi and eurokiwi bonds, instruments that offer exposure to New Zealand?s 8.25 percent interest rate, face the risk of not being rolled over or replaced by other NZD-denominated assets on maturity.
http://www.nzherald.co.nz/category/62/story.cfm?c_id=62&objectid=10457560#Scene_1
Source: The New Zealand Herald
Market Activity
Currency Market - NZD:
Investor confidence in the Kiwi dollar was upbeat during the beginning of this week?s trading in Wellington, as news of the cash injections by central banks worldwide prompted a brief move upwards from the 2-month low of 0.7398 USD. However, the New Zealand dollar dropped below the key psychological level of 0.7400 USD during the New York session, and the currency may face additional downside risk later this month, as unabated risk aversion may mean that NZ$3.6 billion worth of uridashi and eurokiwi bonds may not be rolled over or replaced by other NZD-denominated assets on maturity.
NZDUSD (Daily Chart)
Prepared by DailyFX Research Team
Source: Bloomberg
Equity Markets - NZSX-50 Index:
Despite a modest recovery by global equity markets during Friday?s trading session, New Zealand?s bourse failed to follow its counterparts in rebounding from the downtrend. Although central banks across the globe injected a cumulative $400 billion to avert the possibility of a liquidity squeeze, heightened investor caution led to an across-the-board slide in New Zealand?s stock market. The benchmark NZSX-50 index closed down 0.9 percent, or 39.6 points, to 4070.16, the lowest close since late March. Turnover was weak at NZ$97 million and falls outnumbered gains 68 to 35 on 146 stocks traded. Telecom, responsible for capping NZSX-50?s losses at 1.2 percent during Friday?s trading session, declined 7 cents to NZ $428. As the Kiwi dollar continues to depreciate after the latest OCR hike, currency-sensitive stocks of export manufacturers, such as Pumpkin Patch and F&P Appliances, posted modest gains.
NZSX-50 Index (Daily Chart)
Prepared by DailyFX Research Team
Source: Bloomberg
Fixed-Income Market - 10-year Government Yields:
Yields on New Zealand?s benchmark 10-year government notes remain unchanged at 6.431 percent. Although central banks across the globe injected a cumulative $400 billion within the last 48 hours of the previous trading week, heightened investor caution led to a pullback in riskier Kiwi assets and a consequent surge in demand for government debt.
10-year Government Bond Yields (Daily Chart)
Prepared by DailyFX Research Team
Source: Bloomberg