The New Zealand Dollar Has Peaked, and Investor Confidence is Next
On Wednesday, the New Zealand dollar fell. In the North American session, the NZD/USD is trading at 0.6236, down 0.28%. Pending House Sales in the United States declined but were better than predicted. ANZ Business Confidence is released later in the day in New Zealand.
Business confidence in New Zealand is projected to rise.
The business sector in New Zealand has been negative about the economy, and this is projected to continue. The ANZ Business Confidence Index has been in negative territory for some time, and the March publication on Thursday is likely to provide little respite (New Zealand time). The current estimate is -47.5, up from -43.3 before. The bright side is that things have improved from December's multi-year low reading of -70.2.
The New Zealand economy slowed in Q4, with a y/y rise of 2.2%, down from 6.4% in Q3 and falling short of the 3.3% projection. The ongoing rise in interest rates has slowed economic growth, which RBNZ Chief Economist Conway describes as "desirable." Conway admitted that, despite the Fed's strong tightening cycle, it remained unclear if inflation expectations had been managed.
Notwithstanding the RBNZ's tightening, inflation is expected to be about 5.5% in Q1. The RBNZ meets again on April 5th, with the market pricing in a 25-bp walk at 90%. With a 50/50 possibility of another rate walk in May and increased talk of a rate drop before the end of the year, this might be the end of the current tightening cycle.
Pending House Sales in the United States outpaced
In the United States, Pending House Sales came in at 0.8% in February, compared to 8.9% in January and a forecast of -2.9%. The Case-Shiller Housing Index fell for the ninth consecutive month in January, falling to 2.5%, below the prediction of 2.6% and the previous reading of 4.6%. The housing market is in decline, with mortgage payments nearly double from a year ago.
NZD/USD Technical
- NZD/USD put pressure on resistance at 0.6276 earlier in the day. Above, there is resistance at 0.6349
- There is support at 0.6221 and 0.6148