More bad news and the excuses are pathetic

Yesterday the NZ dollar tumbled against all our major trading partners:

The New Zealand dollar fell 1 US cent as surprisingly weak fourth-quarter consumer price inflation data dashed expectations the Reserve Bank might lift rates this year rather next.

The kiwi dropped to 73.29 US cents as at 12.05pm from 74.30 cents immediately before government data showed the consumers price index rose at an annual pace of 1.6 per cent in the December quarter, below the 1.9 per cent pace predicted in a poll of 13 economists surveyed by Bloomberg and the Reserve Bank’s projection for an annual rise of 1.8 per cent.

Martin Rudings, senior dealer foreign exchange OMF in Wellington said kiwi got “beaten up” on the very benign inflationary picture and it could fall as low as 72.80 cents over the course of the global trading day as rate hike expectations get pushed out.

According to Rudings, market pricing moved from tipping the first rate increase in November 2018 to the first quarter of 2019 on the data. Meanwhile, ANZ Bank New Zealand senior economist Phil Borkin also said the data led him to push out his expectation for the first rate hike to mid-2019 from November this year.

The two-year swap rate fell 5 basis points to 2.17 per cent, a three-week low.

Blaming the fall on weak inflation figures is rubbish. My sources in the finance and banking sectors tell me that the currency market is always deemed to be the bellwether of the country and the economy.

It wasn’t the inflation figure that caused the markets to tank, it was the labour market reforms that were announced. From the drops it shows that the market didn’t favour the labour market reforms announced midday  yesterday.

A 1c fall is a bloody big move, similar on the yen, GBP, Euro and AUD. Inflation figures from last quarter won’t move that, but significant reversing of the labour market successes of the past few years certainly would.


-NZ Herald

Do you want:

  • Ad-free access?
  • Access to our very popular daily crossword?
  • Access to daily sudoku?
  • Access to Incite Politics magazine articles?
  • Access to podcasts?
  • Access to political polls?

Our subscribers’ financial support is the reason why we have been able to offer our latest service; Audio blogs. 

Click Here  to support us and watch the number of services grow.

As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.