The New Zealand dollar dropped initially today as the domestic business confidence worsened. But the currency rebounded later as the general market sentiment was relatively positive and supportive to riskier currencies.
The ANZ Business Confidence dropped to -38.1 in June from -32.0 in May. The report talked about reasons for the decline:
The outlook for the economy is murky. As things stand, there is no reason for the economy to fall into a deep hole. Commodity prices are good, interest rates are at record lows, and the labour market is tight. But the economy is facing credit and cost headwinds and the global outlook is deteriorating.
The agency also predicted that the Reserve Bank of New Zealand will make two more interest rate cuts this year.
While the bad data hurt the kiwi a bit, the currency was rescued by optimism for trade talks between the United States and China at the G20 summit. Indeed, the South China Morning Post reported that the meeting between Chinese President Xi Jinping and US President Donald Trump was scheduled for this weekend and “details of the agreement are being laid out in press releases in advance of the meeting”.
NZD/USD gained from 0.6681 to 0.6692 as of 10:00 GMT today after falling to the daily minimum of 0.6670 earlier. EUR/NZD declined from 1.7021 to 1.6991. NZD/JPY edged up from 71.99 to 72.15.
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