BNZ Weekly Overview, October 22 2009
Welcome to the October 22 2009 issue of the BNZ Weekly Overview.
This week the NZ dollar has traded briefly above US 76 cents and unless the world sinks into a new black hole there seems every chance that in the near future we will once again rise above 80 cents assisted by weakness in the US dollar and a strong Aussie dollar. This reinforces even further that the upturn we are now experiencing is very unbalanced with growth primarily driven by the recovering domestic sector, plus maybe manufacturers exporting to Australia as the Aussie economy looks very strong and we are below average against the AUD.
Wholesale interest rates have crept slightly higher over the week and the outlook remains largely as it has since the middle of March – upside risk. The Reserve Bank review their cash rate next week and while no change is widely anticipated all attention will be on how strongly the RB reiterate – if they do – their intention to leave the cash rate low until the “…latter part of 2010.”