Yesterday’s Construction Work figure in Australia came in just below the indicated expansion levels. This release was good news however, as the previous month’s figure came in at an all time low of -2.8%. This month’s figure pushed the AUD up against the majors, this including NZD and USD.
To help the AUD along the path of strength, the governor of the RBNZ, Graeme Wheeler, made an announcement slightly earlier in the day. The overall announcement had on a bearish tone to it. The what to take out of the announcement was the speculation on rising number renters in New Zealand. This was due to low to low deposit loan limits; meaning that there are less buyers in the market. This had cause lower house price inflation, overall this does not assist the inflation levels in New Zealand, intern this hinders any possibility of interest rate hikes.
The Wage Price index in Australia took a common result of 0.6% quarter on quarter; as the figure has been within 10 basis points of this release for almost 24 months. Typically before 2015, this wage growth had lagged price inflation in Australia; however, more recently it has began to surpass the inflationary levels in Australia.
The Chinese Flash Manufacturing PMI figure fell back in to expansion yesterday. This figure has sat in contractionary levels since late 2013. The figure causes both the AUD and NZD to rally against all the majors.
This morning the New Zealand Trade Balance came in at positive 56 million. The noteworthiness of this is that the release has been in the negatives for 6 months. The expectations were suggesting that the figure would be release at -162 million, therefore the positive release meant that the NZD kicked back at the AUD at almost +0.4%. The fact that New Zealand has achieved a positive trade balance with the recent strengthening of their dollar is almost unheard of. Typically as a domestic currency appreciates, it incentivises importers to purchase more.
The trade balance shows the strength of the Dairy boom in New Zealand, if more economic results similar to this unfold; there is a distinct possibility of parity conditions of the AUD/NZD exchange rate.