Welcome to the December 9 issue of the BNZ Weekly Overview
This morning the Reserve Bank left the official cash rate unchanged at 3.0% which was no surprise. But they have shifted their expectation for the next rate rise out a few months to June and so have we. Weak manufacturing and construction data received this week help make the shift easy to understand along with the results of our monthly survey which show overwhelmingly that respondents are optimistic about 2011 but are still experiencing very tight conditions at the moment.
Offshore the US labour market has turned out weaker than expected but some new fiscal loosening and a few other firm bits of data have supported the greenback and pushed bond yields up quite sharply. In Australia interest rates have also edged up as this afternoon?s employment report was yet again much stronger than expected. The Australian economy is rapidly running into capacity constraints and the implications for us are a lower NZD against the strong AUD and additional attractiveness for skilled Kiwis of hopping over there.