The New Zealand business confidence deteriorated this month, and the outlook was rather pessimistic. Yet surprisingly, the New Zealand dollar held its ground versus most-traded rivals, even gaining on European currencies like the euro and the Swiss franc.
The ANZ Business confidence fell to -38.0 in March from -30.9 in April. The activity outlook dropped to 6.3 to 10.5. The report commented on the state of New Zealand’s economy:
The New Zealand economy is delicately poised. GDP growth has moderated but is still respectable. But leading indicators such as our ANZ Business Outlook survey and the ANZ Light Traffic Index are suggesting that the New Zealand economy is running out of steam quite rapidly.
Furthermore, the report talked about probability of an interest rate cut from the Reserve Bank of New Zealand:
We continue to expect the next move in the Official Cash Rate to be a cut, with a growing risk that it is sooner rather than later.
Indeed, such outlook echoed the general sentiment among investors following yesterday’s RBNZ monetary policy meeting that demonstrated unexpectedly dovish stance of the central bank. As a result, some analysts speculated that a rate cut can happen as early as in May.
NZD/USD traded at 0.6801 as of 12:10 GMT today after opening at 0.6796. EUR/NZD declined from 1.6542 to 1.6507. NZD/CHF rose from 0.6755 to 0.6770, touching the high of 0.6794 intraday.
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