NZ: Labour market data may set tone for RBNZ policy meeting - AmpGFX

Analysts at Amplifying Global FX Capital points out that New Zealand’s Q1 labour data is due this week, Wednesday 3 May, Tuesday afternoon in the USA, ahead of the RBNZ policy meeting and quarterly statement on monetary policy next week on Thursday 11 May which may set tone for the policy meeting.

Key Quotes

“The Q1 NZ inflation data were stronger than expected and suggest that there has been a step-up in underlying inflation, approaching the 2% target somewhat faster than previously anticipated, after a number of years of above-trend economic growth.”

“Any evidence in the labour data that dormant wages growth is starting to respond to tightening labour market conditions may trigger a significant rethink on the neutral policy outlook at the RBNZ.”

“The NZD has been under pressure recently, falling against the AUD, and sitting near its lowest level against the USD since June last year.”

“While NZD may appear expensive on longer term metrics, more recently its decline has been somewhat against the grain.  NZ economic data has remained on a solid trend, NZ inflation has been strong, dairy prices have firmed since last year, and the USD has tended to be soft compared to a number of emerging markets as global growth indicators have strengthened. Longer term US yields have fallen.  Confidence in the ability of the Trump administration and Republican-led Congress to enact the tax reform and infrastructure spending has waned.”