Later that day, Manpower Inc will release its employment outlook for the third quarter of 2006. Job market figures seem to be showing a weakening trend which may cause a lukewarm outlook. The next day, April retail sales are expected to have risen 0.5 percent from the month prior, after a drop of 1 percent in March. A recovery in this figure could help to lighten the spirits of kiwi traders as the currency may be able to stave off an interest rate drop that could be issued to bolster the economy. On Wednesday, food prices are expected to have risen 0.4 percent during May, after a 0.8 percent drop in April, led by a jump in the price of apples. Thursday is the release of Mays non-residential bond holdings, which was relatively high at 69.7 percent of the available debt during April. Friday holds the most anticipated releases of the week as traders and the RBNZ look for signs of whether the economy receding or not. Business PMI has been relatively consistent over the past few months, remaining at the lower end of the expansionary readings. The sector should continue to expand during May, but if a fall below the 50-growth mark is seen, the reaction could be very kiwi-negative as expectations of a rate drop will flourish. Manufacturing activity for the first quarter will also be released on Friday. This sector expanded 0.3 percent during the fourth quarter of 2005.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Last week was almost completely void of economic releases. On Tuesday, the ANZ commodity export price index reported a 2.3 percent rise during May, the second increase in a row and the strongest gain in two years. While raw material prices declined, aluminum and fruit (specifically apple) prices shot up. Before the rate announcement on Thursday morning, the New Zealand dollar lost 100 pips to the US dollar despite the attempts to strengthen in rather volatile trading. The most anticipated event of the week however was the RBNZ rate announcement on Thursday. As was expected, the RBNZ left rates at 7.25 percent. On the announcement, the kiwi rallied over 50 pips. The RBNZ is expected to lower rates some time this year as high interest rates have begun to take their toll on the economy. Economic figures, although somewhat disappointing, have not come in completely negative. The RBNZ does not want to jump the gun on a rate drop as this may fuel inflation further. Through the end of Thursday and Friday, the kiwi managed to recover all its losses however, taking advantage of weak releases for the dollar, ending the week almost right where it started at $0.6343.
