The New Zealand Dollar continues it over-performance as the early hours of Monday morning brought a Consumer Price Index release which came in higher than expected. There is even more good news for the NZD as the Global Dairy Trade Auction this afternoon saw the price of goods rise by more than 3%. This will be very significant as Dairy is New Zealand’s biggest export and it could be the second auction in a row where there is a price increase, this is coming after several months of decreasing prices.
The New Zealand Dollar has also reached a 10-month high against the USD, this is mainly being put down to expected weaker first-quarter GDP for the US. This has indicated it seems unlikely that the Fed’s second interest rate hike will come before the half year.
The latest release of stronger inflation for New Zealand will also help the Reserve Bank as the pressure to further cut the interest rate will be off. China has also shown stability over the last month and their manufacturing industry has shown its not collapsing meaning New Zealand’s raw materials are still required.
The biggest danger for New Zealand Dollar is that it’s not entirely in control of its own fate. If the Fed increases rates or there was trouble in China the NZD would be heavily effected, but for now it’s looking ever more likely like the GBP/NZD rate may drop below 2.00. If you would like to find more information with regards to my forecast, please reach out to me at [email protected]