NZ business sentiment is less dire, RBNZ hint at rate cycle high

Business outlook is now -37.6, up 25.9 points higher than the June low
Business outlook rose for a third month and at its fastest m/m pace since December 2020
Activity outlook rose from -4 to -1.8 (close to expansion)
Import intentions expanded for a second month
A ‘large improvement’ for profit expectations, even though it remains negative overall
Credit conditions highest since mid-2021
All sectors (exc. retail) see improved activity vs 1-year ago
Pricing intentions are still high, but inflation expectations dipped below 6% for the first time in six months

Business sentiment may not be going from strength to strength, but to see pessimism lose its grip after multi-year lows certainly a step in the right direction. Besides, investors tend to look at the rate of change over the absolute level of such indicators, and right now it looks very likely that business sentiment hit its low in June.

Of course, inflation and higher interest rates are having an negative effect on business sentiment. At 3%, RBNZ has one of the highest cash rates among the major economies and second place to the BOC and Fed at 3.25%. It’s likely we’ll see another 25bp hike but it’s also possible we could be nearing the terminal rate. Governor Orr said in August that the “next rate move is not obvious” and earlier today he said that, whilst there’s “still work to do” regarding rates, the tightening cycle was already very mature. So against that backdrop, we suspect a 25bp hike on October the 5^th, and may even see a pause – and will look for such clues in their October statement and minutes.

The potential for a policy divergence between RBNZ and RBA is on the rise

AUD/NZD is currently within its seventh consecutive bullish month and risen over 10% from its September 2021 low. It still has the potential to move back to the 2015 high around 1.1680, but we’ll also keep in mind the potential for a policy divergence between the RBNZ and RBA. And it is by identifying such potential inflection points ahead of time that investors stand a better chance of getting more ‘meat from the bone’ for future moves in currency markets. On that note, AUD/NZD is on track for a bearish pinbar week around current levels, below 1.1500.

AUD/NZD daily chart:

We’ll keep the potential for a policy shift over the coming month/s in the back of our minds. But over the near-term AUD/NZD remains within a strong uptrend on the daily chart, although potentially within a retracement phase. Resistance was met at the upper trendline and 1.1500 handle yesterday and what was “close to being” a bearish outside hammer candle. So there is clearly supply around 1.1500 and prices may drift back towards the 2016 or 2017 highs. If evidence of a swing low materialises then it may find some bullish interest, but even a move back towards 1.1200 could occur and still keep the bullish trend intact.

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.