Summary:
- Business confidence data for September comes in below expectations
- Profit expectations deteriorate to the lowest since 2009
- Kiwi dives on the news being the worst performing major currency this morning
The NZ dollar is by far the worst performing major currency this morning (-0.6% against the USD) after business confidence data for September disappointed across the board. The index measuring confidence slid to -53.5 from -52.3, while the index for activity outlook dropped to -1.8 from -0.5. At the same time, inflation expectations kept declining to 1.63% from 1.7% registered in August, and the outlook for future companies’ profits fell to the lowest since April 2009. In terms of the price outlook, we got nothing which could reassure the Reserve Bank of New Zealand. Namely, pricing intentions (it means how much various firms are willing to raise prices) are now the lowest since October 2016. Such an outcome could be a large disappointment for the RBNZ after the central bank cut its cash rate as much as 50 bps last month. Although the NZ dollar has suffered severe losses of late, it could be struggling in attempting to recover at least some of them given the gloomy economic outlook. To sum up, while the kiwi appears to be unlikely to witness much more weakness, it is equally unlikely to make a big leap ahead in the near-term.
The NZDUSD keeps hovering at around its crucial demand zone. Source: xStation5
