-John McDermott, RBNZ Assistant Governor
The NZD/USD currency pair is forming a double top pattern, with the highest level just slightly below 0.87-mark considered as a major resistance. With current account and GDP on the radar, the level is likely to be breached in the upcoming days, however, until then the pair can fluctuate around the current level of 0.8675.
The main reason for a low volatility and modest fluctuations in the first half of the week, was the disappointing Westpac McDermott Miller measure of consumer sentiment, which showed mood among Kiwi consumers remained upbeat in the second quarter, despite a slight deterioration. Consumer Confidence Index stood at 121.2 in the June quarter from 121.7 three months earlier, suggesting confidence levels are still highly above the 100.0 threshold and are still hovering around a nine-year high. Despite a weaker performance of the indicator, economists were surprised that reading remained resilient despite higher interest rates. Moreover, dairy prices fell off their highs, while housing market is loosing momentum. What is more important, a report showed that neither tightening of the monetary policy by the RBNZ, nor less rosy economic outlook are not prompting a greater desire to save of pay down debt. Meanwhile, a gauge, measuring economic outlook, had eased somewhat since the previous quarter, with the one-year outlook falling 4.3 points, while a long-term five-year economic outlook fell 1.7 points.
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