7 Central Banks of the countries with the leading economies will be holding meetings in June, which will be devoted to future monetary policies in their countries. On 15 June US Fed will make interest rate decision, earlier, on 8 June, a meeting of the Central Bank of New Zealand will be held.
Unexpected decrease in the interest rate by the Central Bank of New Zealand in March caused sharp decline in the NZD on the currency market. In the following up comments RBNZ said that the decrease in the rate was caused by the concerns of the deterioration of the global economy and decline in the inflation expectations in New Zealand.
RBNZ will continue to adhere to the soft monetary policy. At the meeting at the end April, RBNZ left interest rate unchanged at the level of 2.25%. Nevertheless, RBNZ can lower interest rate again at the meeting in June. Currently, annual inflation rate in the country is 0.4%, which is much lower than the target of 1%-3%.
The decline of Chinese imports from New Zealand has a strong negative impact on New Zealand’s economy, as well as the decline in the world prices of dairy and commodities.
Later this week, Fonterra’s forecast of the dairy prices for the next season will be released. If the forecast is negative, it will put additional pressure on the NZD.
Tomorrow at 00:45 (GMT+2) foreign trade balance of New Zealand for April will become known. According to the last month’s data, annual foreign trade deficit amounted to 3.838 million NZD, which was the largest deficit since April 2009. At the same time, positive balance of foreign trade fell in March, amounting to 117 million NZD (against the forecast of 405 million and 367 million in February). It is expected that positive balance will decline further in April and will amount to 60 million NZD.
New Zealand’s macro-economic statistics shows that soft monetary policy in the country is likely to continue. Given different monetary policies of the US Fed and RBNZ, we can conclude that the pair NZD/USD will continue to decline, at least until the meeting of the US Fed on 14-15 June.