28 Mar 2016
NZD strength is stronger than expected - TDS
Research Team at TDS, notes that the NZ’s GDP was 2.5% in 2015, while H2 was a much stronger 3.6% annualised pace, led by the services sector.
Key Quotes
“Inflation is dead in headline terms, while we are still digesting what core inflation is. Weak dairy prices means many farms are operating at a loss, and as such the recent NZD surge towards $US0.69 is unwelcome hence we see a June cut to 2%.
NZD strength (USD weakness) reversed the RBNZ's shock rate cut tactic, and the terms of trade are stronger than expected despite soft dairy prices given even weaker imported energy costs, hence we have upgraded our 2016 NZD forecasts. Our AUDNZD year-end target is 1.16 via the NZD depreciating towards $US0.62 by year end.”
Key Quotes
“Inflation is dead in headline terms, while we are still digesting what core inflation is. Weak dairy prices means many farms are operating at a loss, and as such the recent NZD surge towards $US0.69 is unwelcome hence we see a June cut to 2%.
NZD strength (USD weakness) reversed the RBNZ's shock rate cut tactic, and the terms of trade are stronger than expected despite soft dairy prices given even weaker imported energy costs, hence we have upgraded our 2016 NZD forecasts. Our AUDNZD year-end target is 1.16 via the NZD depreciating towards $US0.62 by year end.”