New Zealand Dollar At Risk of Turn Lower on Extreme Sentiment

The New Zealand Dollar finished the week almost squarely unchanged against its US namesake, as a noteworthy pullback in global risk sentiment offset several bullish data releases from the antipodean economy. The National Bank of New Zealand reported that domestic Business Confidence surged to its highest levels in 10 years—painting a decidedly rosy picture for the future of business growth. Indeed, 49.1 percent of businesses expected the economy to improve over the next 12 months. Currently poor business conditions provide such a low base for growth that improvement should be relatively easy to come by. Yet we cannot deny that overall survey data points to a return to economic growth—however moderate—through the foreseeable future. Limited economic event risk in the week ahead gives little in the way of foreseeable volatility. New Zealand dollar traders should instead keep a close eye on broader financial market risk appetite as seen through the US S&P 500 and clear analogs.