The New Zealand Dollar dropped to a multi-day low on Monday after the currency was weakened by the release of weaker-than-forecast business confidence data. Against the US Dollar the currency dropped from a 34-month high.
The currency dropped after the latest ANZ business confidence index showed a sharp decline in June from the previous month. The index fell from May’s figure of 53.5 to 42.6 this month.
“Optimists continue to significantly outnumber pessimists but overall business confidence is now well off its highs. Higher interest rates are the leading cause and dairy and forestry export prices are sharply lower. Also, the housing market is levelling out and the New Zealand Dollar continues to defy gravity,” said ANZ’s chief economist, Cameron Bagrie.
The currency was also being weighed upon by a separate report which showed that the number of building consents in New Zealand declined by 4.6% last month a sharp drop from the 1.9% in April, whose figure was revised up from a prior estimate of a 1.5% rise.
Comments made by New Zealand Prime Minister also weighed.
John Key said at his post-cabinet media conference that he expects the currency to fall as commodity prices continue to fall.
“Business confidence was the market mover – weaker data in a market which wants to sell the kiwi dollar at a very high level,” said Imre Speizer, senior market strategist at Westpac Banking Corp.
“The market is looking at risk reward – how much more can it go up, maybe half to one cent. It could fall further than that so on a relative probability basis there’s going to be more bias to buying short than long.”
The Pound meanwhile could receive further support against the ‘Kiwi’ if today’s Mortgage data comes in positively.
The Euro was also trading higher against the ‘Kiwi’ as investors await the publication of the latest Eurozone inflation data. Investors will be looking to see whether the rate will continue to be weak. If the rate continues to be weak then investors will no doubt begin to speculate that the European Central Bank will take further steps to tackle low inflation in the single currency bloc.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8735 ,
New Zealand Dollar,, Pound Sterling,0.5149 ,
New Zealand Dollar,,Euro,0.6417 ,
New Zealand Dollar,,Australian Dollar,0.9289 ,
Euro,, New Zealand Dollar ,1.5630 ,
US Dollar,, New Zealand Dollar ,1.1447 ,
Australian Dollar,, New Zealand Dollar ,1.0766 ,
Pound Sterling,, New Zealand Dollar ,1.9476 ,
[/table]
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