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NBNZ Business continues rebound and Australian data on the soft side.

Written by Sam Coxhead on May 31st, 2011.      0 comments

1:40 PM (NZT) After a quiet time in offshore markets with US and UK bank holiday, a weak USD in Asia has seen the NZD and AUD track the EURO higher as various large FX option related stop loss levels were tripped by the EUR.
The NBNZ Business Confidence survey came out at 1pm NZT with a net 38.3 of those surveys expecting things to improve in the coming year. This number has continued the rebound from the slump seen post Feb earthquake. The previous number was just 14.2 , so the increase is significant.

The NZD/USD rate has set another new high at .8251 so far.

The NZ news has been incredibly NZD positive over the last ten days or so and has a few reassessing their views on the local economy, myself included. I can’t help but think the NZD has got a little ahead of itself on a trade weighted basis, forgetting about the factor of the very weak US dollar.
Credit markets are starting to make further assessments of European debt , and overnight Portuguese credit spreads pushed out to record levels. With EU/IMF officials trying to organize a re-working of the Greek bailout conditions, the outlook remains grim for the EUR and overall growth assets in my view. Intra-day noise in the FX markets will only temporarily dislocate price action from the fundamentals, but for the meantime the  momentum remains against risk aversion.
The just released Australian Building Approvals number showed a 1.5% decline against an expectation of -1.7%, Private Sector Credit numbers were flat against an expectation of +.5% and the Current Account was -10.4B vs -10.1B expected. The reaction from the FX markets was somewhat muted and levels are just a little softer to the tune 15-20pts since the release.
The exiting of  bought AUD positions in the NZD/AUD or AUD/NZD pair continues as the rate heads back towards more historically average levels.


          Past 24 hours
  Current level Pre- NBNZ Confi.  % Chge since NBNZ Confi.   Low High
NZD/USD 0.8244 0.8217 0.33%   0.8153 0.8251
AUD/USD 1.0726 1.0751 -0.23%   1.0676 1.0752
NZD/AUD 0.7687 0.7643 0.57%   0.7634 0.7673
AUD/NZD 1.3008 1.3083 -0.58%   1.3032 1.3099
NZD/GBP 0.4990 0.4973 0.34%   0.4964 0.4989
NZD/EUR 0.5736 0.5717 0.33%   0.5706 0.5748
NZD/JPY 66.67 66.44 0.34%   65.98 66.68
NZD/CAD 0.8035 0.8016 0.24%   0.7965 0.8042