Having been the worst performing currency on Friday, the New Zealand Dollar was back at the top of the pile on Monday, even as there was no fresh incoming news or economic data. Instead, it continued to be driven by flows in the AUD/NZD cross rate which then fed through across the majors in what can sometimes be a relatively illiquid currency. On Tuesday, after a worse than expected set of merchandise trade figures, NZD/USD was back on a US 72 cents ‘big figure’ and as it broke down through technical support in the 0.7275-80 area, the Kiwi Dollar again finished as the weakest currency of the day.
Just as New Zealand’s dollar is volatile, so too are some of its economic statistics. In January 2018, New Zealand recorded its largest deficit for a January month since 2007. This deficit contrasts with last month’s surplus, which was the largest ever for a December month. The January 2018 trade balance was a deficit of $566 million. This was larger than January 2017 deficit as imports rose more than exports. Stats NZ noted that, “Both imports and exports reached new highs for January months. Import growth remains strong while export growth didn’t carry on at the same rate as the record-setting December 2017 month.” The official statisticians always provide plenty of fascinating detail and this month’s report was no exception. They report the $373 million (9.5%) rise in exports was led by milk powder, butter, and cheese – up $101 million. The countries with the largest rises in exports in the milk powder, butter, and cheese group were Algeria (milk powder), Peru (milk powder), and Iran (butter). Values were down $21 million to China, due to lower exports of milk powder. This fall is the first for the milk powder, butter, and cheese group to China since November 2016.
Today we have the ANZ Business survey and on Friday the international travel and migration figures. These will be a stark reminder of the importance of tourism to the NZ economy, which is now New Zealand's largest export earner, overtaking dairy in 2015/16. International tourism expenditure reached $14.5 billion in the year-ended March 2017 and it is estimated that international visitors are delivering $40 million in foreign exchange to the New Zealand economy each day of the year – one in five export dollars. The New Zealand Dollar opens in Asia this morning at USD0.7235 and AUD/NZD1.0770.