THE TAKEAWAY: NZ’s Business PMI came in at expansionary levels for the 6th month in a row > Continual economic strength should further bolster the strong Kiwi, but rate cuts remain a concern > NZD Outlook: Bullish
New Zealand’s Business Performance of Manufacturing Index (PMI) came in at 53.4 for March, which while at an expansionary level is below February’s PMI level of 56. The Kiwi did not move much against the dollar following the data release, with the NZDUSD trading at .8585 as of this article’s release.
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This is the 6th straight month that New Zealand’s Business PMI report has indicated growth within the country manufacturing industry. The Kiwi has been appreciating versus other majors currencies recently as investors appear keen to hold the interest bearing asset as interest rates provided by many other securities remain low. Over the last month, the New Zealand dollar is up over 4% versus the Greenback, 3.6% versus the Euro and well over 7% against the Yen. While today’s PMI number was below the previous month, continual expansion within New Zealand’s manufacturing industry should only cement demand for the currency. Moving forward investors should focus on potential rate cuts by the Reserve Bank of Australia should the currency appreciate further.
(NZD/USD 1 month Chart)
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