THE TAKEAWAY: New Zealand credit-card spending accelerates > Market concern about Europe continues to dominate > NZD rises briefly, remains volatile
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The New Zealand Dollar rose following the release of figures pointing to an acceleration in credit card spending. Immediately following the announcement, the Kiwi rose roughly 10 pips before retracing these gains, settling near the 0.7942 level versus the US Dollar as of 02:30 GMT.
According to Friday’s data, credit-card spending grew 1.6 percent month-over-month in September, the fastest monthly growth rate since April. September’s positive growth figure also marks a reversal from the revised 1.4 percent drop in card spending in August. The data provided some respite from recent data pointing to a deterioration in consumer confidence in the South Pacific nation.
However, the overall economic outlook for New Zealand remains uncertain. Net migration data on Wednesday showed that permanent departures exceeded arrivals by 660, suggesting that the gradual recovery from the March earthquake has yet to produce an improvement in sentiment about the economy. With a weak consumer confidence, the RBNZ continues to remain cautious, with no rate move expected for the remainder of 2011
As a risk-correlated asset, the Kiwi will continue to be driven by developments in the lead-up to a summit of EU leaders on Sunday. Recent statements from the Eurozone have provided conflicting signals, with initial signs of discord between France and Germany tempered by speculation that policymakers would seek to combine the temporary and permanent bailout funds, providing total capacity of 940 billion Euro. With Asia-Pacific equity markets oscillating between gains and losses, volatility in the NZD can be expected to continue heading into the weekend.