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Kiwi unchanged despite poor business confidence survey

NZD - New Zealand Dollar

The New Zealand Dollar remains unchanged from yesterday’s market open, currently trading at 0.6674 despite some disappointing domestic data. Locally, it was fairly quiet yesterday for the Kiwi but there was the Quarterly Survey of Business Opinion to digest which ultimately pointed to a continuation of the growth slow-down in New Zealand. The QSBO’s domestic trading activity indicator fell well below its long term average of 11 to -4 which suggests annual GDP growth could be approximately 1% which is well below the expectations of the RBNZ. Trading expectations also fell to -4 which is the first negative print on the QSBO since 2008. Overall, the QSBO survey is more or less in line with market expectations that the RBNZ will look to cut rates in August. Despite the negative news, the Kiwi remained unchanged as the Greenback also weakened across the board, helping the New Zealand Dollar stay in neutral territory.

Wednesday proves to be a quiet day on New Zealand’s Economic Calendar with little to drive momentum. The action will pick up however during the North American session with US employment figures and PMI readings to drive direction.

Key Movers

The Japanese Yen has outperformed overnight, appreciating 0.5% to 107.85 against the Greenback. Aided by significant falls in the bond market across the United States and European Union, the Yen again found itself the beneficiary of a “flight to safety”. Alarmingly, NAB have estimated that approximately 35% of all developed market government bonds is now trading at negative yields which in turn suggests the global economy has some significant challenges ahead.

The Great British Pound was the other major moving currency, falling 0.3% to open this morning at 1.2597. The Sterling was pushed lower after the Bank of England’s Governor Carney released a downbeat economic outlook in a recent speech, citing a number of downside risks to UK and global growth. Notably he suggested that trade tensions had the potential to “shipwreck the global economy”, which some consider to be an escalation in his language. As a result of the speech, the market is now pricing in a more than 50% chance the Bank of England will cut rates in November.

Expected Ranges

NZD/AUD: 0.9514 - 0.9588 ▲

NZD/CAD: 0.8702 - 0.8781 ▼

GBP/NZD: 1.8769 - 1.8972 ▼

NZD/EUR: 0.5893 - 0.5937 ▲

NZD/USD: 0.6636 - 0.6715 ▲