Wednesday’s New Zealand dollar was lower. NZD/USD trades at 0.6236 during the North American session. This is 0.28% less than expected. The US saw a slowdown in Pending Home Sales, but they were higher than expected. Later that day, New Zealand released ANZ Business Confidence.
New Zealand businesses expect to experience an improvement in confidence
New Zealand’s business sector has been pessimistic about the economy and that is expected to continue. The ANZ Business Confidence Index is in negative territory and there is no relief from Thursday’s release (New Zealand Time). The current estimate stands at -47.5, as opposed to -43.3 in December. There are some silver linings. Things have improved since December’s multi-year low of -70.2.
The New Zealand economy saw a slowdown in Q4, recording a 2.2% increase y/y. This is a sharp decline from 6.4% in Quarter 3, and well below the 3.3% estimate. The continuing rise in interest rates has dampened economic activity, with RBNZ Chief Economist Conway describing the slowdown as “welcome”. Conway acknowledged that even with the central bank’s aggressive tightening cycle, it was uncertain if inflation expectations had been contained.
RBNZ projected Q1 inflation expectations at around 5.5%. However, inflation is running at a 7.2% pace despite…