7 May 2014
NZD keeps outperforming - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, underlines the good performance of the NZD.
Key Quotes
"US dollar weakness has been most pronounced against the New Zealand dollar so far this year with the NZD/USD rate rising closer to the high of 0.8843 recorded on the 1st August 2011. The New Zealand dollar has been supported by the strengthening cyclical economic recovery in New Zealand which prompted the RBNZ to become the first G10 central bank to begin raising rates early this year."
"Further evidence of the strengthening cyclical recovery in New Zealand was provided overnight by the release of the latest employment report for Q1. The report revealed that employment growth remained strong increasing by 0.9% although the unemployment rate remained steady at 6.0% as the labour force participation rate rose to a record high."
"Labour cost inflation also continues to remain subdued which at the margin will dampen pressure on the RBNZ to tighten monetary policy. A speech from RBNZ Governor Wheeler overnight also stated that if the exchange rate remains strong and slows tradables inflation, it will be a factor in our assessment of the extent and speed with which the OCR needs to be raised”. Governor Wheeler also stated that “it would become more appropriate for the RBNZ to intervene in the currency market to sell New Zealand dollars” if it remains overvalued in the face of worsening fundamentals with dairy prices expected to decline over the next two to three years."
Key Quotes
"US dollar weakness has been most pronounced against the New Zealand dollar so far this year with the NZD/USD rate rising closer to the high of 0.8843 recorded on the 1st August 2011. The New Zealand dollar has been supported by the strengthening cyclical economic recovery in New Zealand which prompted the RBNZ to become the first G10 central bank to begin raising rates early this year."
"Further evidence of the strengthening cyclical recovery in New Zealand was provided overnight by the release of the latest employment report for Q1. The report revealed that employment growth remained strong increasing by 0.9% although the unemployment rate remained steady at 6.0% as the labour force participation rate rose to a record high."
"Labour cost inflation also continues to remain subdued which at the margin will dampen pressure on the RBNZ to tighten monetary policy. A speech from RBNZ Governor Wheeler overnight also stated that if the exchange rate remains strong and slows tradables inflation, it will be a factor in our assessment of the extent and speed with which the OCR needs to be raised”. Governor Wheeler also stated that “it would become more appropriate for the RBNZ to intervene in the currency market to sell New Zealand dollars” if it remains overvalued in the face of worsening fundamentals with dairy prices expected to decline over the next two to three years."