New Zealand’s Business Confidence At Decade Low -

New Zealand’s Business Confidence At Decade Low

Aug 30, 2018Jeremy ParkinsonFinance0

With the deterioration of New Zealand’s investments outlook, Short NZD/USD?

Business confidence balance declined to -50.3 from -44.9 in July as firms expect general business conditions to weaken in the year ahead

Global Dairy Auction prices fell has been on a downtrend, which could pressure on the country’s primary export. Furthermore, dairy prices could continue to fall if Canada loosen supply management terms during NAFTA negotiations.

New Zealand Prime Minister Jacinda Ardern has announced the formation of a new business council aimed at strengthening the relationship between businesses and the Government.

She said that “The new council work will focus on macro level economic strategy and active leadership on our economic agenda to build a more productive, inclusive and sustainable economy.” However, we are no longer expecting a recovery in the coming months as the current business issues are due to global trade situation and not organic demand.

If Canada does not accede to the new terms, US could pull out of NAFTA and enter into a new agreement with Mexico only. President Trump also threatened to slap Canada with 25% tariffs on auto imports.

The New Zealand government moves to raise the minimum wage and possible industrial law changes have been partly blamed for the slump in confidence.

However, firms’ perceptions of their own prospects were a much better gauge of actual economic outcomes. The activity outlook index held steady at 3.8 percent.

NZD/USD has been on a slide after a string of weak economic data as well as dovish policies. We could see NZD/USD hit 0.6550 in weeks to come. With no recovery expected ahead of times, we will continue to stay bearish.