-Cameron Bagrie, ANZ's chief economist
The kiwi touched a one-year high against the greenback once again on Monday after a series of reports showed the economy will continue gaining momentum in the coming months. The New Zealand currency was buying 0.8676 U.S. Dollars, gaining 0.3% on the day and hitting the highest since April 2013. More and more analysts already consider the currency is overbought, and can become a serious drag on the economy in the nearest future, hence, investors are making their bets on when the rally will be over.
A gauge of business confidence took a small hit last month, as a more tightened monetary policy raised concerns about companies' future profitability. The ANZ Business Outlook survey showed a net 67% of the nation's businesses remained positive about economic prospects, down marginally from 70% in the prior month. The main reason for a deterioration was a 5% drop in the expected profitability over the observed period, while the expectations of hiring more staff posted the same decline.
Earlier on Monday the nation's statistics bureau said the number of building consents jumped by 3%, providing the first boost to the kiwi. Amid plenty of other evidence the economy is on the path to prosperity markets are focusing more on the emerging inflationary pressure that can force the central bank to introduce another rate hike soon.
© Dukascopy Bank SA