http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/http://www.fxstreet.com/fundamental/http://mediaserver.fxstreet.com/images/fxstreet-provider-logo1-en.gif7http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-02-07.htmlLast week, RBNZ Governor Alan Bollard announced he will not seek reappointment when his current term expires on the 25th of September. The change of Governor complicates the timing of interest rate moves and, at the margin, is one reason we now expect rate hikes will be delayed until December. This week’s labour market data will probably be a continuation of recent themes: unemployment is set to remain elevated and there is little upward pressure on wages. Last week we pushed out our call onTue, 07 Feb 2012 06:02:58 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-02-07.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-01-31.htmlThe market reception to the Reserve Bank’s latest OCR review was swamped by the reaction to the US Federal Reserve’s statement just a few hours earlier. Yet we can still find some interesting parallels with the two central banks’ approaches: both have been helped by an easing in inflation pressures, both signalled a longer period of interest rates at record lows, but the tone of their messages reflected their very different circumstances. The RBNZ is still eyeing the resumption of rate hikes,Tue, 31 Jan 2012 05:07:07 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-01-31.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-01-23.htmlEarly indications suggest the New Zealand economy finished 2011 on a fairly soft note. Combined with surprisingly low inflation, this will have the Reserve Bank striking a conciliatory tone at this week’s OCR review. We continue to target September as the start date for the OCR hiking cycle – the perky housing market makes us wary of the market’s expectation for a much later start date. The Quarterly Survey of Business Opinion (QSBO), released on Tuesday last week, showed that the dangers ofMon, 23 Jan 2012 05:39:55 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-01-23.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-01-16.htmlThe New Zealand economy rebounded in the September quarter, and there are signs that low interest rates are spurring domestic activity – in the housing market at least. But the deteriorating news from offshore has taken a toll on household confidence. This week’s QSBO should give us an insight on how business confidence is faring. And with headline CPI set to fall sharply, and underlying inflation pressure muted, the RBNZ can afford watch from the sidelines for some time yet. The New ZealandMon, 16 Jan 2012 07:47:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2012-01-16.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-12-19.htmlThe temporary effects of the Rugby World Cup are likely to feature strongly in Thursday’s September quarter GDP numbers, while the Balance of Payments data out a day before should show a current account deficit well within manageable levels. As such the RBNZ’s attention will be focused on more timely matters such as Europe and overseas funding costs. Of potentially greater import will be December quarter consumer confidence. Meanwhile, the near-term inflation picture is looking increasinglyMon, 19 Dec 2011 05:13:01 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-12-19.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-12-12.htmlFriday’s European summit kept hopes alive that the ECB might provide more monetary relief to troubled European economies, but achieved little else. Meanwhile the RBNZ’s Monetary Policy Statement was the highlight of a busy but low-impact local data week. The tone of the Statement was broadly as expected, with a weaker global outlook translating into a softer stance on the outlook for interest rates. But the RBNZ is still actively looking to head off inflation pressures likely to be generatedMon, 12 Dec 2011 05:20:24 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-12-12.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-12-05.htmlLast week’s data highlights an important distinction in the outlook for the New Zealand economy. While we still hold to the view of a long-term rebalancing towards export-led growth over domestic demand, events dictate that the mix of growth for the next year or so is likely to be just the opposite. The cooling global economy will make life harder for exporters, while construction will play an increasingly important role. The 0.7% fall in the September quarter terms of trade marks theMon, 05 Dec 2011 05:57:53 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-12-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-28.htmlWhile the European crisis continued, last week’s local data were mixed: we got further confirmation that the Rugby World Cup has been a major temporary boost to tourism, further bad news on the migration front (we think also temporary), and signs that inflation expectations remain worryingly high. But good and bad local news alike is likely to take a back seat to global concerns in the RBNZ’s thinking for the time being, keeping rates on hold until well into next year. There was good news andMon, 28 Nov 2011 05:42:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-28.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-21.htmlThe most important release last week was the September quarter retail trade numbers, where the much anticipated spending boost from the Rugby World Cup was at last glaringly apparent. Yet despite this good news early in the week, NZ interest rates have fallen sharply in recent days on the back of developments in international markets. The world came to play in New Zealand during September and October as the country hosted the Rugby World Cup – and we finally have the data to show they managedMon, 21 Nov 2011 05:50:54 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-21.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-14.htmlThe European debt crisis took a nasty turn last week, as the market’s focus shifted from Greece to Italy – a much more dangerous proposition, as Europe’s existing rescue facilities are nowhere near large enough to provide a bailout. Both the Greek and Italian Prime Ministers resigned last week, with the hope that this will pave the way for new interim governments that can push through tough austerity programs. But at this point it’s not clear that any sort of fiscal hairshirt will be enough toMon, 14 Nov 2011 06:06:38 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-14.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-07.htmlThe Greek drama playing out over the past week is a reminder of the continuing uncertainty that led the RBNZ to put off rate hikes until March next year. Meanwhile, the New Zealand economy has been going through a soft patch since the middle of the year, of which this week’s disappointing employment figures are the latest sign. That means more subdued inflation pressures, allowing the RBNZ to keep rates on hold until June – as we believe it eventually will if the global economy continues toMon, 07 Nov 2011 05:52:54 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-11-07.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-31.htmlLast week was jam-packed with data and economic events in New Zealand, with Thursday’s OCR Review by the RBNZ the headline act. As universally expected the Bank left the OCR unchanged at 2.5%. In the end, the short statement essentially reiterated their September view of the world although subtle changes included an acknowledgement of softer domestic data, falling business confidence and a change in tone on inflation. With GDP growth a paltry 0.1% in the June quarter and some mixed growthMon, 31 Oct 2011 05:49:56 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-31.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-25.htmlThe big event this week is the RBNZ’s Official Cash Rate Review. After having mulled over the worrying news coming from offshore in recent weeks and months, we’ve updated our OCR forecast to incorporate a later and slower pace of hikes, starting with 25 basis points in June next year and finishing with the OCR peaking at 6% in 2015. But the RBNZ is unlikely to signal a significant shift in view in this week’s press release. Our updated interest rate call is unchanged in two key ways: comparedTue, 25 Oct 2011 05:48:42 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-25.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-17.htmlThe economic indicators for September are rolling in, and there’s a sense that the first half of the Rugby World Cup (RWC) was as much of a hindrance as a help. It may be that some activity has been displaced to other times of the year, rather than cancelled outright. But at a time when the global economy is slowing and we’re on alert for signs that the NZ economy is vulnerable, the unknown impact of the tournament is greatly complicating matters. Meanwhile, the recovery in ChristchurchMon, 17 Oct 2011 05:20:53 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-17.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-10.htmlMarket sentiment about prospects for Eurozone economies continues to be swayed by political developments. But, so far, financial market volatility has had a relatively muted effect on NZ business confidence. Surveys are consistent with modest underlying GDP growth heading into the second half of the year. And while the Rugby World Cup is providing the much anticipated boost to visitor spending, it is also displacing some domestic activity. Headlines out of the Eurozone pushed markets one wayMon, 10 Oct 2011 05:09:42 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-10.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-03.htmlRatings agency Fitch lowered our sovereign credit rating by a notch early last Friday, followed by Standard and Poor’s later in the day. The rating downgrade is a reflection of New Zealand’s ongoing external indebtedness in an increasingly hostile global financial environment. While the independent impact on interest rates is likely to be small, it’s one further step on the road to higher rates, relative to what we’ve seen in the past. Having put New Zealand’s credit rating on negative outlookMon, 03 Oct 2011 07:24:47 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-10-03.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-26.htmlLast week’s local data provided plenty of food for thought on some of the crucial issues facing the economy at present. Improvements to the balance of payments and net overseas assets data shed new light on the debate around New Zealand’s imbalances relative to other countries. GDP was disappointingly weak, but served to highlight the role of the tourism sector – a major issue right now with the Rugby World Cup under way. And dairying continues to be a leading light for the local economy,Mon, 26 Sep 2011 06:11:10 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-26.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-19.htmlThe RBNZ hit the pause button in the September MPS, as intensifying global economic and financial risks outweighed an improving domestic economy and higher headline inflation. Interest rates will still have to move higher next year, but we now expect the first OCR hike will be in January. How the European debt crisis develops will be critical. This week’s GDP release should confirm the economy maintained momentum in the June quarter. Our forecast is for 0.7% GDP growth. Last week’s decision byMon, 19 Sep 2011 06:32:01 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-19.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-12.htmlThe past week saw an interruption to the run of positive New Zealand data that we’ve had, as well as ongoing volatility in global financial markets. Given global uncertainties we now expect the RBNZ to hold off on rate hikes until December. But emerging inflation pressures continue to call for a rapid sequence of hikes come 2012. Internationally, financial stresses have intensified further, with markets increasingly pricing in the likelihood of a Greek default, with attendant losses toMon, 12 Sep 2011 05:32:30 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-12.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-05.htmlThere was a lot going on for the New Zealand economy last week, and if there was any common thread it would have been ‘resilience’ – to the wider impacts of a major earthquake, to a deteriorating global environment, and to an exchange rate that remains near record highs. We have provisionally revised up our estimate of how much the economy grew in the June quarter, and will review it again after this week’s major sectoral indicators. A year after the first of several major earthquakes inMon, 05 Sep 2011 05:57:28 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-09-05.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-29.htmlThe tension that New Zealand’s Reserve Bank grappled with in its July monetary policy review – between domestic conditions clamouring for higher rates, and a highly uncertain global environment – intensified further last week, with more bad news on the inflation front. We continue to think the fragile state of financial markets will stay the central bank’s hand come September. But of the three key assumptions that the RBNZ articulated in its June forecasts – that increases in inflationMon, 29 Aug 2011 06:18:12 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-29.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-22.htmlDespite early appearances, last week turned out to be another dominated by overseas turmoil, dashing any hopes that global financial risks might be receding. Equity markets and risky currencies like the New Zealand dollar reclaimed some of their early August losses, but relapsed last Thursday night after some atrocious US economic data and further suspicion about the European banking system. As distressing as the ups and downs of global equity markets may be, they are largely a side issue. TheMon, 22 Aug 2011 06:12:40 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-22.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-15.htmlHeightened fears of sovereign debt default in Europe (and therefore risks to the region’s fragile banking sector), against the backdrop of anaemic growth prospects in the US, have ignited extreme volatility in financial markets worldwide. This volatility is unlikely to disappear anytime soon, meaning the Reserve Bank won’t be reversing March’s 50 basis point insurance rate cut in a hurry. It’s early days yet but other channels via which recent events may affect the New Zealand economy includeMon, 15 Aug 2011 05:00:17 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-15.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-08.htmlLast week’s domestic data may not have been packed with surprises, but it helped shed more light on the pace and composition of New Zealand’s recovery. In short, growth maintained momentum into the second quarter but the earthquake disruption in Canterbury has certainly been apparent. While there’s still plenty of water to go under the bridge before next month’s MPS, volatility in global financial markets has intensified in recent days. Depending on how the situation evolves in coming weeks,Mon, 08 Aug 2011 11:01:25 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-08.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-01.htmlIn its press statement last Thursday the Reserve Bank kept the OCR on hold at 2.5%, and issued a rather nuanced interest rate outlook. The upshot is that the RBNZ is planning 50 basis points worth of hikes in the near term, followed by a pause. But the early hikes are conditional on the domestic economy continuing to recover (which seems likely), and global financial risks receding (which is less certain). Last week the RBNZ issued one of its shorter press statements, but short doesn’t meanMon, 01 Aug 2011 10:52:10 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-08-01.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-25.htmlAfter a long period with little activity in interest rates, last week’s stronger than expected inflation data saw the market capitulate and left it scrambling to pick the next OCR hike. We haven’t been swayed from our call for a December move, and we think the Reserve Bank will raise concerns about the strength of the exchange rate in this week’s review. Even so, an extended tightening cycle is undoubtedly on the way; the optimal time for borrowers to fix is drawing near. Consumer prices roseMon, 25 Jul 2011 06:31:32 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-25.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-18.htmlMarch quarter GDP data confirmed that the New Zealand economy is gaining momentum. Combined with upward revisions to 2010 GDP growth estimates this means stronger growth and less spare capacity than we previously thought. Today’s CPI data is expected to push annual inflation to 5.2%, keeping the pressure on the RBNZ. However with the NZD continuing to set fresh post-float highs and global growth prospects remaining murky, we are sticking to our call that the first rate hike won’t be untilMon, 18 Jul 2011 06:14:39 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-18.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-11.htmlThere was plenty of timely economic indicators out last week, which helped to compensate for a further delay to the alreadylagging March quarter GDP release. Statistics NZ made an eleventh-hour decision to delay the GDP release another week until this Thursday, as it double-checks its assumptions around the impact of the devastating 22 February earthquake. The more suspiciously-minded in the markets suggested that Stats NZ may have pulled the plug after coming up with a figure wildly differentMon, 11 Jul 2011 07:19:24 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-11.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-04.htmlAfter a light data week, the focus is on March quarter GDP and the June quarter QSBO. We expect to see economic momentum outside Christchurch dominate quake-related disruption. Last week was light on data, but this week the market’s eyes will turn to two major updates on recent New Zealand economic activity. Tomorrow’s Quarterly Survey of Business Opinion will give us the first firm lead on the state of activity in the June quarter. And on Thursday, GDP figures will give us a definitive readMon, 04 Jul 2011 07:05:28 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-07-04.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-27.htmlEarthquake effects continued to ripple through data last week. The current account deficit widened marginally to 4.3% of GDP, but also served as a reminder of the important rebalancing that has been taking place in the economy recently. There has been a definite shift away from the domestic demand-led growth of last decade and toward improved export sector performance. Ultimately this is a positive for the New Zealand economy, but in the meantime the improvement in domestically-focused sectorsMon, 27 Jun 2011 05:46:14 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-27.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-20.htmlLast week was dominated by two severe aftershocks in Christchurch, and renewed market fears around European sovereign debt. A messy default by a Euro state could materially impact the RBNZ’s stance - the latest quakes are unlikely to do so. Christchurch was once again shaken by two serious aftershocks on Monday last week - the first of magnitude 5.6 and the second of magnitude 6.3. Sixteen people were admitted to hospital and one elderly person died following the earthquakes. There wasMon, 20 Jun 2011 06:08:26 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-20.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-13.htmlThe Reserve Bank is inching closer to raising rates as it grows more confident about the pace of the domestic recovery and the sustainability of export prices. We’ve brought our OCR forecasts slightly forward, and we now expect a 25 basis point hike in December. There was a markedly more upbeat tone to last week’s Monetary Policy Statement compared to the last few OCR reviews, and with good reason: the domestic economy is gathering momentum again, and has held up far better than might haveMon, 13 Jun 2011 06:04:44 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-13.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-07.htmlThe NZD hit new highs, supported by a suite of data emphasising New Zealand’s strong external conditions. For the RBNZ, NZD appreciation is an important factor offsetting recent improvements in domestic data. Combined with the tight budget this should keep the RBNZ firmly on the sidelines next week – though rising inflation expectations will be watched nervously. The NZD stole the spotlight last week, as the currency reached post-float high of 82.64 against the USD. A confluence of factorsTue, 07 Jun 2011 06:01:32 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-06-07.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-30.htmlHaving taken the time to absorb the Budget, we’ve confirmed that it was significant enough to warrant some downward revisions to our forecasts. We’ve also noticed an interesting vein of scepticism among many commentators around the economic forecasts that underpinned the Budget. To the extent that those forecasts have much in common with our own, we thought we should offer up a few defences. The Treasury anticipates GDP growth of 1.8% in the year to March 2012, accelerating to 4.0% in the yearMon, 30 May 2011 06:07:22 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-30.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-23.htmlLast week’s Budget was all about cost-cutting and getting the government finances back into surplus. While that was no surprise, the Budget was even tighter than we expected – suggesting a more moderate GDP growth and interest rate profile than we had assumed. The government had signalled that last Thursday’s budget would feature a sharp clampdown on government spending, but even so Budget 2011 delivered more on this front than many, including us, would have anticipated. Given that the BudgetMon, 23 May 2011 06:27:27 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-23.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-16.htmlWith last week’s releases added to the pile, we feel the evidence that the domestic economy is gaining momentum is now definitive. That will be only of mild comfort to the Government as it prepares to deliver a very frugal Budget next week. Household activity has continued to pick up since the start of this year. Electronic card transactions rose a seasonally adjusted 1.7% in April, leaving them up 5% since the start of the year. Spending was up across all of the broad categories exceptMon, 16 May 2011 06:34:34 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-16.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-09.htmlLast week brought with it plenty of promise; green shoots in activity data point to the New Zealand economy (ex-Canterbury) emerging from hibernation in early 2011. But after such a sustained soft-patch a pickup in growth should not cause concern on the inflation front. We’re also gradually getting a clearer picture of the disruption caused by February’s earthquake and how activity in the region is recovering. Headlining last week’s busy data calendar was a suite of labour market indicators.Mon, 09 May 2011 06:02:04 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-05-09.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-04-26.htmlAnnual inflation rose to a less-thanexpected 4.5% in the March quarter, helping to curb the market’s recent enthusiasm for the possibility of OCR hikes this year. Quarterly movements in the CPI usually tell us more about idiosyncratic factors than about underlying inflation trends, and that was particularly the case this time. The main source of inflation was petrol, which rose 9.7% and added 0.5 percentage points to the CPI. Administrative charges were also prominent: a 12% increase inTue, 26 Apr 2011 04:50:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-04-26.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-04-18.htmlWholesale interest rates have risen substantially in the last week, and the New Zealand dollar continued its climb to a three-month high, as the market toyed with the idea that the Reserve Bank may begin raising rates before the end of the year. Appropriately, some of the grounds for this view came from the RBNZ itself – a speech by Governor Bollard, and an accompanying research paper, which painted an upbeat picture of the outlook for commodity export prices and the consequences for the NewMon, 18 Apr 2011 05:04:42 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-04-18.htmlhttp://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-04-11.htmlThe latest Quarterly Survey of Business Opinion (QSBO) was of particular interest, not just for its role as an early indicator of quarterly GDP. The survey was conducted in the weeks following the Christchurch earthquake on 22 February, which meant that respondents will have had some time to put this tragic event into perspective. So while the survey revealed an understandable blow to sentiment about the broader economy, firms’ own performance and intentions were surprisingly robust. OutsideMon, 11 Apr 2011 04:55:15 GMThttp://www.fxstreet.com/fundamental/analysis-reports/natalie_denne@westpac.co.nz (Westpac Institutional Bank)http://www.fxstreet.com/fundamental/analysis-reports/weekly-commentary/2011-04-11.html