The New Zealand dollar made another strong move this morning, testing a level close to the psychological 0.63 level.
NZDUSD currency pair approaches 0.63 level
The New Zealand dollar surprised many after the currency failed to fall following the recent dovish move by the Reserve Bank of New Zealand.
I think positioning could take some of the blame as markets were already bearish on the NZD ahead of the RBNZ decision and had priced in a fair amount of bad news for the currency in recent weeks.
The catalyst for the NZD’s rise today was ANZ’s business expectations and private activity data, with business expectations jumping to 50.6, the highest since 2014.
While the report was strong, it is worth noting that much of the optimism was not due solely to the RBNZ rate cut, as there was a surge in optimism in opinion polls conducted before the cut. Naturally, the optimism generated by the expected cuts helped the situation.
But not everything was rosy, as ANZ added a caveat to the report, saying that “reported past activity, which has been well correlated with GDP over its short history, barely rose, and remains very weak at -23.”