The New Zealand dollar is almost unchanged in the Monday session. NZD/USD is currently trading at 0.7109, down 0.05% on the day.
ANZ Business Outlook shows improvement
New Zealand released the preliminary reading of the ANZ Business Outlook for September. The survey is normally published at the end of the month, but ANZ has been releasing mid-month surveys due to Covid. The reading was an improvement over the August release. Business Confidence rose to -6.8, up from -14.2 beforehand. The survey also found that inflation pressures had eased, but cost pressures remained extreme.
The government is going ahead with plans to ease lockdown restrictions as Covid numbers continue to fall. The New Zealand dollar has rebounded sharply and has more room to move higher if risk appetite improves. NZD/USD jumped 1.10% in August and has padded further gains of 0.90% in September as it trades above the 71 line. If economic conditions improve and the RBNZ can move forward with a rate hike, the New Zealand dollar should respond with further gains.
New Zealand GDP ahead
New Zealand releases GDP for the second quarter on Wednesday (the last major economy to post this release). The economy will be hard-pressed to repeat or beat the strong 1.6% gain in Q1. Still, the consensus of around 1.3% is more than respectable and would indicate that the recovery continues at a good pace.
Investors have circled September 22 on their calendars, which is when the FOMC holds its next policy meeting. The dismal non-farm payrolls likely extinguished any chance that the Fed would announce a long-awaited taper at this meeting. Still, that does not mean that this meeting will be perfunctory. If upcoming numbers such as this week’s retail sales are strong, the Fed could signal that tapering is a go at the FOMC meeting in November. Such a move would likely provide a strong boost for the US dollar.
- There is resistance at 0.7159 and 0.7202
- On the downside, there is support at 0.7074. Close by, there is support at 0.7032
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