Forex Marketz Daily Forex News – Fully Markets Update
The New Zealand dollar (NZD/USD) continued to extend Wednesday’s losses. The Kiwi fell as it tracked front end government bond yields lower. Investors, after housing data was released today, are losing hope that the Reserve Bank of New Zealand (RBNZ) will hike rates anytime soon. This has sparked a selloff with the local currency unit.
Barfoot & Thompson, New Zealand’s largest privately owned real estate company, released housing data that showed median house prices in Auckland fell 4.1 percent over the past three months. Sales volumes, for housing units, have fallen to the weakest level since 2010.
Next, hurting the Kiwi dollar, the government introduced an initiative to address multinational tax evasion. The measures are expected to generate, in New Zealand dollar terms, an extra $200 million per year. This is according to calculations presented by the island nation’s Finance Minister Steven Joyce.
Housing Data and other Factors influence the RBNZ
These tow developments, Wednesday morning, would seem to undermine the Reserve Bank of New Zealand’s rate hike path. The central bank is using a series of macro prudential tools to cool the expanding bubble in the country’s housing market. If, the data is true, and prices are falling, then the RBNZ official cash rate (OCR) can be allowed to remain lower. By doing this, the RBNZ will encourage a return to on target inflation.
The government tax evasion plan should trim consumption. This could be seen as hurting economic growth. In other words, cooling price pressures, and inflation. This could mean that the RBNZ will end up delaying tightening its monetary policy anytime soon. Markets are still pricing in at least one rate hike within the next twelve months.
