The New Zealand dollar dropped against other most-traded currencies today as nation’s manufacturing sector almost stopped expanding last month. The general negative market sentiment wasn’t helping the currency either.
The BusinessNZ Performance of Manufacturing Index dropped from 52.7 in April to 50.2 in May. The indicator was getting dangerously close to the 50.0 level of no-growth. Furthermore, it was the lowest reading since December 2012. BNZ Senior Economist Doug Steel commented on the worrying development:
The PMI sends a warning signal for near term growth via its mix of falling production, near flat new orders, and rising inventory. Next weekâs Q1 GDP should be reasonable, but beyond this downside risks are accumulating.
Meanwhile, Statistics New Zealand reported that food prices rose 0.7% in May (0.4% with seasonal adjustments). The increase followed the small decline by 0.1% in the previous month.
NZD/USD slumped from 0.6567 to 0.6535 as of 10:18 GMT today. EUR/NZD gained from 1.7160 to 1.7240. NZD/JPY declined from 71.12 to 70.71.
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