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NZ Dollar Gets Support From Upbeat Data Deluge

NZ Dollar Gets Support From Upbeat Data Deluge

David Cottle, Analyst


Talking Points

  • The New Zealand Dollar got some pre-Christmas cheer on Monday
  • A raft of data from its home country came in strongly
  • Perhaps a bit too strongly in terms of the Auckland housing market

The New Zealand Dollar gained against its US cousin on Monday after a raft of encouraging data out of its home economy.

Business confidence rose in December according to NBNZ, whose index rose to 21.7 from 20.5 in November. That news came at the same time as the ANZ activity index for the same month. That also rose hitting 39.6, from the previous month’s 37.6.

But that was just the start.

Consumer confidence was also found to have risen in the third quarter. The Westpac-McDermot Miller index was up 5.2 points to 113.1, driven by a remarkable recovery in the crucial dairy industry. This was the largest quarterly rise for four years.

Overall the numbers look good for the New Zealand economy, although nagging worries about a housing bubble persist. The total number of building permits issued in New Zealand rose 2.6% on the month in October, official figures showed.

That was way above September’s 0.2% increase. For the year through October 30, 161 new dwellings have received consent. That’s the first time the figure has topped 30,000 for eleven years, with fully one third of the new homes due to be built in hotspot Auckland. This latest snapshot underlines those previously released, which also showed strong regional disparity.

But that wasn’t all. Growth in New Zealand’s service industries rose by 1.3 points in November to 57.9, the Bank of New Zealand-Business NZ’s performance of services index (PSI) showed on Monday. That makes November one of 2016’s strongest months - a reading above 50 signals expansion in activity. Tourism and a rise in net immigration drove service demand, despite a deadly earthquake.

NZD/USD rose to 0.69800 after the data deluge, from 0.69609 before it.

Broad good news for NZD/USD

Chart compiles using TradingView

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--- Written by David Cottle, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.