NZD has been declining against the USD dollar for the fourth consecutive session. The USD overrides other currencies in the currency market this week.
US positive macro-economic statistics of this week have reassured investors that the rate hike in the USA can take place.
According to the futures for the Fed interest rates, probability of the rate hike in December was 64.3% on Wednesday against 50% in the middle of last month.
Another proof that the US economy is strong enough to withstand the increase in the higher interest rate was released on Wednesday, when it became known that ISM index in the service sector in September has grown to the annual highs (57.1 against the forecast of 53.0 and the previous level of 51.4). The number of production orders, which is an important indicator of the economic situation in the country, has grown by 0.2% in August against the forecast of -0.1% and 1.4% in July.
According to the (ISM) Institute for Supply Management report released this Monday, index of purchasing managers (PMI) in the manufacturing sector rose to 51.5 in September vs 49.4 in August.
This is a very positive indicator, and the rise in the index above 50 shows the increase of activity in this crucial sector of the U.S. economy.
The NZD was affected by the negative results of the dairy auction on Tuesday. According to the Global Dairy, price index for dairy products has declined (is 3.0%). Note that milk powder is the main item the country's exports.
In the summer the RBNZ Governor Graeme Wheeler said that further monetary policy easing would be required in order to ensure average inflation rate at the middle of the target range, which is 1% -3%.
Investors believe that probability of the rate decrease by the RBNZ in November is 70%.
New Zealand's economy, which is based on agriculture, is growing. According to one of the estimates released this week, GDP growth may soon exceed 4.0% against the current level of 3.5%.
Investors are waiting for the data on the US nonfarm payroll for September, which will be released on Friday (15:30 GMT+3).
In case of the positive data, expectations of the rate hike in December will increase and pressure on the commodity prices and commodity currencies including the NZD will also go up.
At the same time in this case the RBNZ may postpone its decision to lower interest rate in the country. Next meeting of the RBNZ will be held on 9 November.