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3 Feb 2015
NZ labour data eyed - RBS
FXStreet (Bali) - According to RBS FX Strategists, any further improvement in NZ jobs data today may solidify the divergence in economic performance between New Zealand and Australia.
Key Quotes
At the January meeting last week, the RBNZ noted that it expects “to keep the OCR [policy rate] on hold for some time” while adding that “future interest rate adjustments, either up or down, will depend on the emerging flow of economic data.” To be sure, the shift in language by the RBNZ, specifically the move to put rate cuts more firmly on the table, was a dovish signal by the RBNZ.
Still, New Zealand is enjoying a resurgence in construction and housing activity, and the latest Global Dairy Trade auction showed a 9.4% rise in the composite dairy prices, a key New Zealand export, including a 19.2% jump in whole milk prices at auction. In the January statement, the RBNZ continues to describe the NZD as “unjustified” in terms of current economic conditions, “particularly export prices” – dairy prices, in particular, are a key input into the RBNZ’s assessment of whether the RBNZ expects to see a “further significant depreciation.”
Another key domestic data release is due today – New Zealand releases quarterly employment for the fourth quarter. A further improvement in data may solidify the divergence in economic performance between New Zealand and Australia – we see scope for additional downside in AUD/NZD. Additionally, RBNZ Governor Wheeler is scheduled to speak for the first time since the RBNZ’s January decision.
Key Quotes
At the January meeting last week, the RBNZ noted that it expects “to keep the OCR [policy rate] on hold for some time” while adding that “future interest rate adjustments, either up or down, will depend on the emerging flow of economic data.” To be sure, the shift in language by the RBNZ, specifically the move to put rate cuts more firmly on the table, was a dovish signal by the RBNZ.
Still, New Zealand is enjoying a resurgence in construction and housing activity, and the latest Global Dairy Trade auction showed a 9.4% rise in the composite dairy prices, a key New Zealand export, including a 19.2% jump in whole milk prices at auction. In the January statement, the RBNZ continues to describe the NZD as “unjustified” in terms of current economic conditions, “particularly export prices” – dairy prices, in particular, are a key input into the RBNZ’s assessment of whether the RBNZ expects to see a “further significant depreciation.”
Another key domestic data release is due today – New Zealand releases quarterly employment for the fourth quarter. A further improvement in data may solidify the divergence in economic performance between New Zealand and Australia – we see scope for additional downside in AUD/NZD. Additionally, RBNZ Governor Wheeler is scheduled to speak for the first time since the RBNZ’s January decision.