The New Zealand dollar was soft today despite positive domestic macroeconomic data. The main reason for the currency’s weakness was the risk-off market sentiment that was driving commodity currencies lower. Over the week though, the kiwi was one of the strongest currencies on the Forex market thanks to the surprise monetary decision of New Zealand’s central bank.
The BusinessNZ Performance of Manufacturing Index rose from 48.8 in September to 52.6 in October. The reading above the neutral 50.0 level means that the manufacturing sector was expanding. That was the first month of expansion after three months of decline. BNZ Senior Economist Doug Steel commented on the result:
The October PMI is hardly what you would call strong. But it is certainly much better than the previous three months where the index languished below 50 which indicated a sector going backwards.
White House chief economic adviser Larry Kudlow said that a trade deal with China is close but “not done yet”. He stated:
We are coming down to the short strokes. We are in communication with them every single day right now.
The lack of details in the statement made markets remain cautious, dragging riskier currencies tied to raw materials down. While it fell today, the New Zealand currency kept its weekly gains caused by the surprise decision of the Reserve Bank of New Zealand to keep interest rates on hold.
NZD/USD was about flat at 0.6379 as of 9:55 GMT today. EUR/NZD traded at 1.7274 after opening at 1.7267 and falling to the daily low of 1.7232. NZD/JPY edged up from 69.15 to 69.30.
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