New Zealand dollar trades back below 59 US cents

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the greenback. The Kiwi dollar was almost up 3% higher on Friday. It was the biggest daily percentage increase in the NZD since June 2010. The NZD ended the week at around US$0.5930, its highest closing level in more than six weeks. The Kiwi dollar was the top-performing currency last week, helped by the tailwind of a stronger CNY (which was 0.9% stronger). The Kiwi outperformed the Aussie dollar on the week, with the Reserve Bank of Australia RBA’s cautious approach to tightening policy (another 25bps rate hike last week) contrasting with a very strong NZ employment report, which solidified expectations for a 75bps Reserve bank of New Zealand hike later this month.

Looking ahead this week in New Zealand and on Tuesday the Reserve Bank of New Zealand (RBNZ) will release quarterly Inflation Expectations. A Survey of about 100 consumers asks respondents where they expect prices to be 24 months in the future. While measuring expectations of future inflation can manifest into real inflation, primarily because workers tend to push for higher wages when they believe prices will rise. On Friday we will see the release of the BusinessNZ Manufacturing Index. A survey of manufacturers asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. Also on Friday Statistics New Zealand will release the Food Price Index (FPI) which measures the change in the price of food and food services purchased by households.