New Zealand Dollar Consolidated as Consumer Borrowing Increased
The New Zealand Dollar consolidated as credit card spending increased to 4.6 percent in June, year over year, from 3.9 percent in May. The figure falls in line with the six year average credit spending rate at 4.4 percent. A pickup in credit consumption tends to bode well initially for the economy as greater spending would imply that goods and services should circulate at a quicker rate. It’s unclear as to whether the increase in credit consumption has had an impact on inflation as second quarter CPI fell to 1 percent from 1.6 percent on the year.
Markets may be waiting for the Reserve Bank of New Zealand rate decision on July 26 to take decisive action on their bets. According to Credit Suisse figures, traders appear to be anticipating a 95 percent chance of no change to the current 2.50 percent benchmark lending rate. Furthermore, holding positions over the weekend can carry a greater risk of loss, so it’s of little surprise that price was relatively unchanged entering into the last day of trading for the week.
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