Kiwi & Aussie higher on positive data

New Zealand’s business confidence moved higher in July, as employment and investment outweighed concerns over the European debt situation. Overall a net of 15% of firms expect business conditions to pick up over the next year, compared to 13% last month. 24% believe that their own productivity will improve, whilst nearly 11% expect that they will need to hire more staff compared to just 3.4% in June. The Canterbury rebuild finally looks like starting with building approvals up as mentioned yesterday and so it is anticipated that growth should steadily climb and more jobs become available.

The Australian Bureau of Statistics said yesterday, that the number of building approvals declined far less than expected in June after a surge of 27% the previous month. The forecast was for a 15% drop from the previous month’s strong figure, so the small decline of 2.5% was deemed a real positive for the Australian housing market and saw the Aussie dollar move to a 4 month high of 1.0535 vs. the USD, as expectations the RBA will cut their interest rate from 3.5%, when they meet next week, diminished.

In the US, consumer confidence unexpectedly climbed for the 1st time in five months the Conference Board Index showed, from 62.7 to 65.9 and against expectations of a fall to 61.5, as optimism creeps back into the market, fuelled by improving economic conditions and better job prospects. Also aiding the positive momentum was the less than expected house prices decline where expectations were for a 1.4% fall compared to an actual fall of just 0.7%, the smallest decline in nearly 2 years. With house prices looking like they are stabilising, it will be a big boost to the sector and should help drive the housing market recovery.

Finally in Europe, Eurostat confirmed that inflation for the region remained constant for the 3rd consecutive month at 2.4%, still well above the less than 2% target the ECB has set. However the elevated rate is unlikely to deter the European policy makers from taking action at their meeting on Thursday night (NZ time) as inflation is likely to trend lower as consumer prices remain steady.

This morning, before the FOMC meeting tonight, we see the currencies relatively unchanged, the Euro having firmed slightly against the Greenback to 1.23, whilst the Kiwi is back around .8090 after reaching .8120 overnight. As mentioned, the Aussie touched 1.0535, before retreating back to 1.05.

NZ firms more optimistic as Canterbury rebuild will spur growth & employment