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More patience required for those looking for the NZD to outperform the AUD

Written by Sam Coxhead on January 19th, 2012.      0 comments

5:10 PM (NZT)
The New Zealand Economy:
The NZ economy has had two separate pieces of relevant data this week. Tuesday saw the release of the NZ Institute of Economic Research’s quarterly survey of business opinion. The survey saw the headline plunge again in the fourth quarter of 2011. The one positive point from the survey was a pickup in activity in Christchurch as the rebuilding picked up momentum. This will help underpin the economy in 2012 as other provinces struggle to maintain growth. Today saw the release of the 4th quarter inflation numbers. In the current environment inflation is not the concern it would be in less fragile times. But interestingly the inflation fell .3% in the quarter, and was led lower by a nosedive in vegetable prices in December, off a whopping 25%. The lower inflation print will bolster those of the opinion that the Reserve Bank of NZ will maintain its low 2.50% cash rate throughout 2012. The RBNZ announce monetary policy on Thursday next week, but universally there is no change expected.
The Australian Economy:
Today saw the release of some very mixed employment numbers in Australia. A dramatic reduction in part time jobs has somewhat balanced by increased fulltime jobs numbers. Overall the data was not particularly positive , al6though the unemployment rate was a low 5.2% vs 5.3% expected. Better than expected Chinese GDP data yesterday boosted sentiment for the Australian economy which is so reliant on Chinese growth to bolster demand for its exports. Inflation data on Wednesday next week will be the focus.
The impact on this currency pair:
This pair remains in somewhat familiar territory. The NZD is finding pockets of demand which in waves has pushed it higher against the AUD. Today’s inflation  data proved difficult for the NZD and the AUD managed to maintain its pressure through the employment data. Further patience is required for those looking for higher levels at which to sell the NZD. .7800 (1.2820) remains the initial target in the short term for the pair to move back towards more historic averages.
The current interbank midrate is:                                                            NZDAUD .7615                           AUDNZD 1.3132
The interbank range so far this week to date has been:                 NZDAUD .7663 - .7775            AUDNZD  1.2861 – 1.3050