NZD at 14-mth high as NZ business confidence jumps

The New Zealand dollar is higher for a third straight day. NZD/USD is trading at 0.6374 at the time of writing, up 0.53% on the day.

New Zealand business confidence hits 10-year high

The week started on a positive note as New Zealand’s ANZ business confidence surged to 60.9 in September, up sharply from 50.6 in August and crushing the forecast of 43.0. This was the highest level since April 2014 as most categories showed an increase in activity.

The positive data was a vote of confidence in the Reserve Bank of New Zealand’s decision to lower rates in August, the first reduction since 2020. The rate cut was a surprise as the RBNZ had previously sounded hawkish about its rate policy due to stubborn inflation.

The economy has been in the doldrums and second-quarter GDP fell by 0.2%, down from 0.1% in Q1 but better than the market estimate of -0.4%. The economy has contracted in five of the past seven quarters and the RBNZ is expected to cut aggressively in order to reverse the economic downturn. The RBNZ meets next on October 9 and there are no major releases ahead of the rate meeting.

US Core PCE Index drops to 0.1%

US Inflation is moving in the right direction and Friday’s Core PCE Price Index, the Fed’s preferred inflation indicator, was within expectations. The index rose just 0.1% m/m in August, a three-month low. This was down from 0.2% in July and below the market estimate of 0.2%. Yearly, Core PCE ticked up to 2.7%, after three consecutive months at 2.6% and in line with expectations.

NZD/USD Technical

• NZD/USD is testing resistance at 0.6373. Above, there is resistance at 0.6426
• There is support at 0.6335 and 0.6302

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