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A quiet week for the New Zealand dollar

Written by Simon Norrie on August 17th, 2012.      0 comments

Friday 17 August 4:50 PM NZT. On Tuesday the latest retail sales data showed spending was up 1.3% in the June quarter and although this was above expectations it had little effect on the currency. This morning we had the New Zealand Producer Price Index (PPI), which is a leading indicator of consumer inflation. This came in above expectations at 0.6%.

As a result, like just about every other currency pair this week, the Kiwi has been very well behaved, bobbing around in small ranges against most crosses. Whether it’s the sleepy hangover of the Olympics or the lack of significant economic data both here and offshore the net result has been an incredibly boring week of trading. Whilst the US economic fundamental data has improved a touch, so has New Zealand’s this week, so once again it comes down to interest rate differentials, and our 2.5% cash rate is still a driver. Looking to next week it is hard to see much changing before the US unemployment claims on Friday. The NZDUSD .8200 level still appears a real ceiling, so for sellers of NZD buyers of USD, a level worth targeting.

Looking ahead to next week, domestically all we have is the RBNZ’s inflation expectations release on Tuesday. This is unlikely to be of much focus, so expect any action to be driven by events outside New Zealand, in the coming week.

Topics: New Zealand dollar