"If any more evidence was needed that the economy is now in recovery mode, this is it. In fact, people are the most upbeat about their finances that they have been in six years, and economic optimists now outnumber pessimists by the widest margin since December 2004."
- Felix Delbrück, senior economist at Westpac
The kiwi was sold in 75% of all cases across the board on Wednesday, while 73% of traders were holding short positions on NZD/USD, suggesting New Zealand currency will depreciate. Additionally, a slight majority (53%) of all pending orders were placed to sell the pair, meaning in a long-term the pair has a potential to depreciate. In contrast, the fundamental data from New Zealand is drawing bright picture for the kiwi, as business confidence ballooned to a 15-year high in December.
The ANZ Bank Business Outlook index came at 64.1 this month accelerating from 60.5 in November, suggesting a net 64% of companies within the country are feeling upbeat about the future outlook. Confidence level in agriculture and services sectors jumped to the highest since 1994 and 1999, respectively. Together with consumer confidence at a four-year high the data pushed analysts to update their forecasts, as the economy is rebounding form drought conditions last summer and 2010 earthquake in Canterbury.
Earlier this month the RBNZ pledged to start increasing interest rates in the first half of 2014. Even though, the likelihood of higher interest rate have not weighed on business or consumer confidence.
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