The NZD has continues lower and starts the shortened week trading near its recent lows against the USD. Levels are above 70 cents which had not been seen since June last year proved short lived as the NZD spent the remainder of the week on the back foot as the appeal for the commodity currencies eased. The data wrap last week was dominated by the First Quarter inflation release which came in slightly stronger than expectations. A small lift was also seen in the latest GDT dairy auction. This week’s focus centre’s squarely on the RBNZ OCR announcement on Thursday the 28th and the US FOMC announcement a few hours earlier. Expectations locally are for rates to be held at 2.25%, although one of the major four Australian banks is calling for another move lower. Areas of concern for the RBNZ which should prevent a cut will be the strong property market particularly in Auckland, which has now seen the average price of a home in the city become more expensive than Sydney. Emerging signs of inflation in the areas of the economy which are performing strongly such as accommodation and construction also favour a delay until June at least.
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