The New Zealand Dollar had a much wider trading range than its Australian cousin last week, even though there wasn’t much headline-grabbing news locally. From Monday’s low just above 0.7200, it was virtually a non-stop climb all the way up to a best level on Thursday around 0.7320 which at one point pushed the AUD/NZD cross down to a 9-month low of 1.0530. An 80-pip slide in NZD/USD saw it print a low on Friday of 0.7245 before a modest rally into the close at 0.7275 and a net gain on the week a little over a quarter of a cent. Given the continued volatility in the NZD, it should come as no great surprise to see it topping our one-day chart so far today, even though there has been no fresh news. NZD/USD is back at US 73 cents with GBP/NZD in the low 1.83’s.
The main attention in New Zealand this week will be on the REINZ Quarterly Survey of Business Opinion, usually abbreviated to the QSBO. Begun in 1961, it is New Zealand's longest running and most comprehensive business survey which covers manufacturers, builders, architects, wholesalers and retailers, and service sector firms. Information from these industries provides useful indicators of future investment patterns, and the likely direction and composition of economic growth in coming quarters. The last QSBO back in January had showed a sharp drop in business confidence following the General Election, with a net 11 percent of businesses expecting economic conditions to deteriorate over the first half of 2018 and Tuesday’s update will be watched closely for signs of improvement amongst NZ businesses.
As with the Bank of England, the next RBNZ monetary policy decision doesn’t come until May 10th. At its last meeting on March 22nd, the RBNZ kept the Official Cash Rate unchanged at 1.75%. It noted that, “GDP was weaker than expected in the fourth quarter, mainly due to weather effects on agricultural production. Growth is expected to strengthen, supported by accommodative monetary policy, a high terms of trade, government spending and population growth. Labour market conditions are projected to tighten further… Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.” For the week ahead, it appears that the uncertainties mostly come from overseas, and in particular what the US may or may not do next in its trade spat with China. The Kiwi Dollar opens in London this morning at 73 US cents with GBP/NZD at 1.93.