The New Zealand Dollar has had a pretty whippy 24 hours. Yesterday morning it was knocked back by the RBNZ’s latest survey of inflation expectations. Whilst year-ahead inflation expectations rose from 1.77% to 1.87%, the more closely-watched 2-year expectations (which aligns more closely with the RBNZ’s mandate) fell from 2.09% to 2.02%. NZD/USD fell from an opening level of USD0.6911 down to a low of 0.6881.
As the USD then came under pressure during the NY session, the Kiwi Dollar climbed all the way up to a high of 0.6951 but overnight gave back 30 pips of these gains to open in London at 0.6920 and is another 5-10 pips at today’s North American open. After the Crown Financial Accounts were published overnight, Finance Minister Grant Robertson said in a statement, “The government is committed to the fiscal parameters we outlined before the election, which include reducing government net debt to 20 per cent of GDP within five years of taking office, maintaining government expenditure to within the recent historical range of spending to GDP, and delivering a stable surplus throughout the Treasury's Budget forecast period." Currency markets took these words with a pinch of salt.
For the NZD, the key event is still Thursday’s RBNZ meeting.