The Reserve Bank of New Zealand could be prepared to raise interest rates at the end of 2017 if the current economic conditions continue to improve. There is a bustling construction industry which has seen nearly 40’000 new houses being built this year. The economy’s strength has also continued after earthquakes hit the country in November.
The ANZ’s monthly business confidence survey found that 22 percent of businesses were optimistic for the year ahead. Furthermore 40% of respondents expected better times for their business ahead, this figure was 12% above the average which indicates strong signs of growth.
Tomorrow the GDP figures will be released for Quarter 3 which are expected to show 0.9% growth, this would lift the annual growth for the economy to 3.7%. The Kiwi has dropped since the US Interest decision last week and a good GDP release could potentially help it gain back some of the ground. In my opinion the NZD has been heavily overvalued in the last few months as the US continued to hold of interest rate hikes. Now that there has been a hike and talk of more, I would not be surprised to see the NZD start to slowly unravel.
This could start to have further positive effects on New Zealand’s economy as many of their exports have start to become cheaper.
The USD/NZD rate has moved to a six-month high as the US Dollar’s recent strength continues. This is possibly the best indicator of investors taking their money out of the higher risk NZD and moving it into the Greenback as a safer investment.
If you’re looking to purchase New Zealand Dollars in the near future, you should get in touch with your broker. There are so many different factors affecting the currency, that making your requirement clear could make sure we can be of most assistance. Call our trading floor or email me here if you have any questions regarding todays report.
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