Weekly Outlook: New Zealand Dollar Quiet Ahead of Sparse Economic Data

The <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New Zealand dollar eased further off of recent yearly highs, as a long week of US dollar strength left other currencies in its wake. Despite three consecutive days of rallies to the 0.6620 mark, the Kiwi finished 10 points lower on the week to its lowest close since September. Given a relatively empty schedule in the week to come, NZD bulls may be hard-pressed for a substantive rally until the following week of central bank speeches and inflation data.

To kick off the week of trading, government officials will report on the level of Non-Resident Bond holdings in the small island economy. Due on the 16^th at 02:00 GMT, markets widely expect that the report will show that foreigners still hold the vast majority of private and national debt. Some may hope, however, that worries over a sky-high Current Account deficit will decrease the attractiveness of local interest rates?the highest of any nation with a top S&P sovereign rating. This in turn would allow more manageable equilibrium in total foreign-held debt and ease speculation that the New Zealandgovernment may lose their top S&P credit rating.

Due later in the week, tourism authorities will report on Visitor Arrivals growth through the month of September. Given that tourism accounts for a substantial portion of New Zealands services industry, analysts tend to use the Visitor Arrivals growth figure in formulating broader outlook on the economy as a whole. Though it is rarely a market-moving indicator onto itself, any significant improvement or worsening of the headline 3.2 percent growth rate could reflect itself in New Zealand dollar currency pairs.

Finally, analysts look forward to the release of Credit Card Spending numbers, due on the 20^th at 02:00 GMT. After posting annualized growth of 7.5 percent through the month of September, many expect that moderating domestic demand may limit the headline consumer debt figure. This may likewise weigh on expectations of next weeks Consumer Price inflation numbers and the RBNZs Official Cash Rate announcement. We will watch these developments accordingly.

Economic Releases for October 15 October 20