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NZD rises with positive comments from RBNZ

NZD - New Zealand Dollar

Despite the strength in USD due to stronger than expected US unemployment figures, the NZD was the best performing currency on Friday, up 0.3% to open at 0.6559 against the USD this morning. The upsurge can be owing to RBNZ Deputy Governor Bascand’s positive comments how “we actually think the economy is somewhere near a turning point”, after the RBNZ surprised the markets by keeping its cash rate unchanged at 1% when most expect to see a 0.25% cut.

All eyes are on the release of the Half-Year Economic and Fiscal update (HYEFU) on Wednesday, where Finance Minister Grant Robertson will reveal the details of the government's fiscal package, where he has indicated a major spend-up on infrastructure. ANZ economists speculate that the Government could bump up the spending by $5 billion to $15 billion. If implemented, this stimulus will help provide a boost to growth in the construction sector, helping to boost inflation.

Key Movers

Adopting a broader scope, we saw upbeat global risk sentiment on the back of the stronger than expected US employment data. The non-farm pay roll data documented payroll growth of 266K for the month of November, dwarfing the market consensus of a 180K rise. This was the key driver of markets on Friday and allowed the USD index to rise 0.3% with the S&P500 and bond yields also ticking higher.

In contrast to the USA, a surprise rise in the unemployment rate in the Canadian economy rendered the CAD the worst performer on the day. It fell 0.6% against the greenback with the EUR also falling from 1.1110 to 1.1040. The pound was only slightly lower after its week of gains as markets look to position themselves ahead of this weeks general election in the UK.

Expected Ranges

NZD/AUD: 0.9515 - 0.9680 ▲

NZD/CAD: 0.8630 - 0.8795 ▲

NZD/EUR: 0.5840 - 0.6020 ▲

GBP/NZD: 1.980 - 2.0325 ▼

NZD/USD: 0.6485 - 0.6620 ▲