Monday was an unusual day for the New Zealand Dollar: it finished neither top nor bottom of the one-day performance table! Normal service was resumed on Tuesday, however, as the NZD gained against every one of the major currencies we follow here. During the Asian session it rose to USD0.7344; its best level at any point since the election. By late afternoon in Europe it had extended these gains to a high around 0.7360; the best since September 20th and less than half a cent shy of a fresh 6-month high.
The Kiwi’s strong performance came after news that New Zealand, along with 10 other nations, has agreed to the new formation of the Trans-Pacific Partnership (TPP). The Pacific trade pact was abandoned by US President Trump and the 11 remaining members reached a deal on a revised agreement, with the nations to work toward signing the deal by early March, according to Singapore’s government. The deal has been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and its trade Minister enthused that, “The CPTPP will enhance trade among countries in the Asia-Pacific, resulting in more seamless flows of goods, services, and investment regionally.”
Also helping the NZD was the performance of services index. December’s index fell back to 56.0 though the Press release from BusinessNZ was pretty upbeat saying the services sector ended the year in solid expansion territory and noting the monthly average for 2017 of 56.9 was up on the 2016 average of 56.6. They drew attention, also, to the sub-index of new orders which showed strong expansion with an average over 60 points for 2017.
The main focus for the rest of the week will be Thursday’s quarterly CPI numbers which consensus estimates will be around +0.4% q/q and 1.9% y/y. The RBNZ’s published forecast is one-tenth lower on both measures.
The NZD opens in Asia this morning at USD0.7350 with AUD/NZD at 1.0875.