NZD: June marked another strong month - BNZ

Research Team at BNZ, suggests that the RBNZ’s June Monetary Policy Statement proved to be a key upward influence on the NZD.

Key Quotes

“The cash rate was left unchanged and an easing bias was maintained, in line with the Bank’s view back in March and April. While this came as no surprise to most locals, many offshore investors were expecting a more dovish tone, and some even a rate cut, so this set the NZD alight. Talk of currency intervention was hosed down, with the Governor noting the inability of the Bank to influence the exchange rate.

Local economic data were generally supportive of the NZD. Q1 GDP came in at the higher end of market expectations, at 0.7% q/q and 2.8% y/y. The housing market remained strong, with REINZ data showing solid sales data and a further rise in house price inflation (+14.7% yoy on the stratified index). Monthly PMI-manufacturing, business confidence and consumer confidence indicators lifted a touch, while tourism figures remained strong.

Overall, it was an upward march for the NZD over much of the month, although it fell with a thud after the Brexit result. NZD/USD still managed a gain of 5.5% and gained on most of the crosses. GBP was the weakest of the majors and NZD/GBP was up a remarkable 15%. Under the circumstances, EUR held up well, managing a flat result against the USD and NZD/EUR up almost 6%. NZD/AUD traded in a tight range for the last three weeks of the month, and the 2½% gain overall largely reflected the move up following the more hawkish than expected RBNZ MPS. NZD/JPY was down almost 2%, as demand for Yen strengthened due to its safe-haven status.”