NZD faces up to Financial Stability report

10.52 NZST, Wednesday 8 May 2013

NZD faces up to Financial Stability report

By Andrew May (Sales Trader, CMC Markets New Zealand)

As the Dow Jones steams majestically ahead of the 15,000 barrier, a rejection in the form of a partially premeditated Reserve Bank of Australia rate cut yesterday had the resource currencies putting the brakes on as traders weighed up risk appetite.

The 25bpt cut to Australia's benchmark lending rate yesterday knocked the wind out of the sails of the beleaguered Australian currency taking with it the Kiwi in its wake. The immense sell off of the Aussie that more or less began Monday's open ensured the Kiwi fell from grace falling one US cent from a high of 0.8526 to a low of 0.8425.

And there have been further runs on the Kiwi today due to growing concerns from the Reserve Bank's half yearly Financial Stability report released this morning. An overpriced and under resourced housing market creating increased risk to the financial system, high LVR home loans as a consequence, rising levels of personal debt and a worrisome first quarter drought impacted GDP figure all go to paint a portrait of a not so rosy NZ.

As key data appears on the horizon, expect additional falls against the New Zealand Dollar as the economy struggles its way out of a bleak macro-economic outlook.

ENDS

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