- ASB Chief Economist Nick Tuffley
Following more than a half-month long period of depreciation the NZD/USD is finally bottoming out. While U.S. statistics can drag the pair significantly lower, the panic surrounding last RBNZ meeting begin to wane. The Kiwi edged higher 0.11% trading at 0.8511 at the moment of writing, rebounding from this month's low at 0.8493.
Amid strong technical level at 0.85 the Kiwi also found support in domestic data. A report form Statistics New Zealand showed building consents jumped in June following a sharp drop in May, suggesting developers are making the most of low borrowing costs while they last. The country consented a total of 1,950 new dwellings over the observed period rising 3.5% on a monthly basis, however, still failing to offset May's 4.4% revised drop. At the same time, residential construction work rocketed 27% from a year ago, totalling $772 million. Nevertheless, higher interest rates and restrictions on low equity borrowers have led to a moderation of the domestic housing market, with house-price inflation registering steady declines.
Another worrying sign for the New Zealand economy came from the world's largest dairy company Fonterra, which reduced its forecast dairy payout for the next season. Dairy is a key priority for New Zealand farmers, and account for majority of overall exports, meaning the economy can lose one of its drivers.
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