New Zealand ANZ business confidence tumbled by a further -5 pts in August to -50. Meanwhile, Activity Outlook was unchanged at 3.8. ANZ noted that “manufacturing is now the least confident sector – likely a lagged impact from construction sector woes”. On the other hand, The services sector is the most optimistic. Also “activity sub-indicators remain weak” and “threat to near-term activity is real.”

It’s a “particularly sharp turnaround” in the manufacturing sector from being the most optimistic in April, to the most pessimistic in August. Manufacturers’ export expectations are holding up. Thus, “this weakness is an echo of construction sector pessimism”. Employment intentions “continue to ease” and are weakest in “agriculture and construction sectors”. And, “it seems increasingly inevitable that wariness amongst firms will have real impacts, in the near term at least, as investment and employment decisions are deferred.”

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Also released in Asian session, New Zealand building permits dropped -10.3% mom in July. Australian building approvals dropped -5.2% mom in July, private capital expenditure dropped -2.5% qoq in Q2. Japan retail sales rose 1.5% yoy in July.

The Australia Dollar isn’t a good performer this week, but the New Zealand Dollar is even worse. The strong rebound today suggests temporary bottoming at 1.0870 in AUD/NZD. Given that it was close to medium term trend line support, and there is bullish convergence condition in 4 hour MACD, the decline from 1.1174 is likely finished. Focus is back on 1.0991 minor resistance. Break will at least bring a test on 1.1174 high.


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