Global Themes

NZD

Kiwi stagnant despite US jobs overshoot

164K jobs added to the American economy in April.

The New Zealand Dollar remains anchored around the 0.70 cent handle despite US jobs gains coming in below par on Friday night. The world's largest economy added 164K jobs in April versus an expectation of 192K from economists. Wage growth was a mere 4 cents, 0.1% on the month and 2.6% on an annualised basis. Despite this US unemployment still hit an 18 year low of 3.9%, as participation numbers hit their lowest level since January.

The Kiwi failed to reap much benefit from the softer US print, and has importers on notice as we begin a week headlined by the RBNZ this Thursday.

RBA says next move up but no time soon

Banks extend rate hike projections to Q1/Q2 2019.

The Reserve Bank of Australia presented an upbeat outlook for the Australian economy in its policy statement on Friday. The central bank sees growth at 3.25% by the end of next year, and inflation at 2.25% by the same period. Nonetheless it fired a warning to leveraged and interest only borrowers that credit conditions would tighten and that they need to be prepared.

Should the domestic outlook remain on track the RBA reaffirmed that the next move on rates would be up but concluded that there were was no case for a hike in the near term. NZD/AUD drifted lower on the release and will be volatile this week with a slew of trans-Tasman data on the cards.

RBNZ, Aussie budget due this week

Inflation expectations tomorrow may help to decipher RBNZ on Thursday.

It's going to be a busy week across the Antipodes with Australian business confidence, retail sales and the federal budget being accompanied by inflation expectations and the first RBNZ meeting for new governor Adrian Orr here.

The trend is not the friend of USD or AUD buyers right now so their hopes may hinge tenuously on a more upbeat outlook from the new RBNZ governor.

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