Talking Points:
- New Zealand Inc. is feeling pretty good across the board
- The latest survey of business confidence showed astonishing gains
- The New Zealand Dollar bulls naturally liked what they saw
See how the New Zealand Dollar is viewed by the trading community at the DailyFX Sentiment Page.
The New Zealand Dollar got a lift Thursday thanks to a rise in domestic business confidence.
The Australia and New Zealand Bank’s indicator hit 24.8 in June, for a nine-month high. This was a massive increase from April’s 14.9. ANZ said that firms were upbeat about their prospects and keen to hire and invest.
Indeed, it went on to say that its own composite growth indicator is now pointing to 4% Gross Domestic Product growth this year. While admitting that that was probably “a stretch” given that real growth is around 2.5%, the bank said that that might now rise.
The figures seem to reflect renewed confidence in both domestic and global prospects. A net 25% of businesses said they were confident about the year to come. That’s up ten points on the previous month. Sentiment rose across all sectors, but was notably buoyant in agriculture.
Such a vote of confidence in the economy unsurprisingly lifted the New Zealand Dollar against its flagging US cousin.
The Reserve Bank of New Zealand declined to raise interest rates from their record lows this month, but did release a statement which was regarded by the markets as less hawkish than its predeccessor. If the current run of stronger economic numbers endures, the kiwi can expect support from expectations that that record low’s days are numbered.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
