Halister News

(Bloomberg) -- Kiwi may retest last wk’s spike to 14-mo high of 0.7341 in the event of better-than-expected dairy auction as well as 2Q labor and consumer confidence data this week, according to Bloomberg strategist Michael G. Wilson.

• NZD/USD trades at 0.7228, still above level when RBNZ cut rate by 25bps last Thursday
  • Short-covering following RBNZ’s well-priced in decision sent kiwi spiking to 0.7341 on Aug. 11, highest since May 2015
• RBNZ’s attempts to stoke tradables inflation may be challenged by this week’s event risks:
  • Milk futures for September 2017 delivery are trading near contract highs ahead of tonight’s dairy auction at 12:00 UTC
    • In cutting rates last week, RBNZ governor Wheeler noted that low dairy prices are depressing incomes in the dairy sector and reducing farm spending and investment; improving dairy backdrop may prompt RBNZ to pause on further easing
• New Zealand 2Q unemployment rate will rise to 5.3%, up from a downwardly revised 5.2% prior, according to 16 economists surveyed by Bloomberg
  • A lower than est. jobless rate may stoke kiwi strength and help negate the effects of further RBNZ rate cut
• Jump in Aug. consumer confidence on Thursday to test 121.4 year’s high would be testament to consumer resilience as the worst of Brexit fallout may have passed
  • Net 61% of consumers expect house prices to rise in next 12 months from 50% in previous ASB Bank household survey

• NOTE: Michael G. Wilson is an FX strategist who writes for Bloomberg. The observations he makes are his own.