NZIER QSBO Scrutinised On Eve Of RBNZ Policy Announcement

The kiwi edged lower after the release of NZIER's Quarterly Survey of Business Opinion, which showed "a weakening in business confidence in the September quarter, despite demand in firms' own business holding up," but has managed to shake off this initial weakness. The QSBO is closely watched by the RBNZ, who use it to support their economic estimates.

• The survey was conducted between Aug 2 and Sep 27, "capturing some of the effects of the Covid-19 community outbreak and lockdown." Businesses turned pessimistic about the economy in Q3, even as net 29% of them reported improvement in their trading activity. In addition, survey results suggested that a moderation in inflation pressures may be in sight.
• The much watched survey hit the wires at a time when monetary policy decisions from the Antipodean central banks draw near. The RBA will announce the outcome of their deliberations later today, with their colleagues from the RBNZ set to steal the limelight tomorrow. The implied probability of Gov Orr & Co. raising the OCR by 25bp tomorrow is 84% as we type (per BBG WIRP tool).
• Looking into the rear-view mirror, NZD/USD managed to eke out some gains Monday as crude oil prices jumped, lending support to commodity-tied FX space.
• The rate last trades at $0.6967, just shy of neutral levels. A retreat past $0.6860, which cushioned losses on Sep 29 & 30, would bring the key Aug 20 low of $0.6805 into view. Conversely, topside focus falls on the 50-DMA at $0.7010, followed by Sep 23 high of $0.7093.