NZ Dollar Strong Despite Drop of Manufacturing Index

The New Zealand dollar was among the strongest currencies on the Forex market today, together with its Australian counterpart. The kiwi managed to rally despite the report that showed a drop in New Zealand’s manufacturing index.
The BusinessNZ Performance of Manufacturing Index dropped from 59.0 in July to 50.7 in August, seasonally adjusted. BusinessNZ’s executive director for manufacturing Catherine Beard explained that the lockdown in Auckland was the main reason for the sharp decline:

After two months of playing catch-up, the level 3 lockdown placed on New Zealand’s largest population and economic region meant the sector would experience another hit. While results in other parts of the country led to the national result keeping its head above water, the latest results show how fragile and short the recovery can be.

On the positive side, the index remained above the neutral 50.0 level of no growth. Indeed, BNZ Senior Economist, Doug Steel said as much:

An outcome above the 50 breakeven mark – indicating a modicum of growth occurred in the month – is arguably a commendable result given more than a third of the country moved into alert level 3 for more than half of the month.

In other news, Statistics New Zealand reported that the Food Price Index rose 0.7% in August after increasing by 1.2% in the previous month. With seasonal adjustments, the index was up 0.6% in August. The biggest gain was registered in fruit and vegetable prices (3.1%, or 2.2% with seasonal adjustments). Non-alcoholic beverage prices, on the other hand, demonstrated a small drop of 0.1%.
NZD/USD gained from 0.6649 to 0.6690 as of 10:44 GMT today. EUR/NZD was down from 1.7756 to 1.7729, retreating from the daily high of 1.7793. AUD/NZD traded at 1.0914 after opening at 1.0908 and rising to the daily high of 1.0929.
If you have any questions, comments, or opinions regarding the New Zealand Dollar, feel free to post them using the commentary form below.

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