THE TAKEAWAY: New Zealand’s Business PMI came in at an expansionary level for the 3rd straight month > Positive economic data likely overshadowed by Central Bank speculation > NZD/USD Outlook Neutral
New Zealand’s Business Performance of Manufacturing Index came in at a level of 56.3 for February, surpassing January’s level of 55.2 and marking the third straight month of expansion for New Zealand’s manufacturing industry. The Kiwi did not appear to react to the data release, but has been showing significant gains, alongside its Aussie neighbor, since the middle of 2012, due to demand for its relatively high interest yield.
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Although the Business PMI report is certainly a positive sign for New Zealand’s overall economic health, it will likely be placed on forex trader's back burner in favor of the Reserve Bank of New Zealand’s recent rate decision and Governor Wheeler’s comments. While the nation’s central bank chose to maintain rates at their 2.5% level, statements made by Wheeler pointed to a more dovish monetary stance, as a result of the currency’s high valuation. In claiming that the country’s “strong currency may give scope for rate cuts” Wheeler has left the door open for future central bank action. This fact may hinder the New Zealand dollar from gathering too much forward momentum, even in the face of positive economic data, such as today’s PMI report.
NZD/USD (240 day chart)
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