FXstreet.com (Barcelona) - Pessimism on the local economy had been receding in the lead-up to the HLFS in New Zealand. After all, recent partial data (building consents, business confidence, and Auckland housing) have actually been fairly positive.

However, following the recent shock jump in the unemployment rate to 7.3%, the RBNZ rate cut expectations have ratcheted higher once more, though not by much. According to the Research Analyst Mike Jones at BNZ, “The reaction actually looks surprisingly modest as the market pricing is consistent with ‘just’ 15bps of cuts over the next 12 months.” Perhaps investors have become wary of RBNZ Governor Wheeler’s more hawkish stripes?

“Whatever the case, upcoming local data seem unlikely to alter investors’ downbeat perceptions of the NZ economy. Today’s card transactions data should show a small bounce-back in retail spending in October. However next week’s more important quarterly retail survey will likely reveal spending slipped a fraction through the third quarter as a whole.” Jones predicts.