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RBNZ Reluctant To Play Ball On Including House Prices In Monetary Policy Remit


NZD/USD was well bid Thursday, which allowed it to make a move at the $0.7100 mark. A stronger commodity complex provided a tailwind for the kiwi, while the greenback struggled against most of its G10 peers.

  • The RBNZ passed the hot potato of booming housing market back to the Finance Ministry. Gov Orr replied to a letter from FinMin Robertson, recommending "that the gov't's specific housing objective be issued as a factor for the Reserve Bank to take into account when setting financial policy under section 68B of the RBNZ Act (1989) and articulated in the Reserve Bank's forthcoming Financial Policy Remit," rather than as part of the Monetary Policy Remit as proposed by the Finance Ministry.
  • On the same note, the latest REINZ House Sales data showed a continued surge in turnover and prices in Nov, with headline House Price Index hitting a fresh record high of 3,343. Sales rose 29.6% Y/Y after increasing 25.0% in Oct.
  • Elsewhere, food price index eased off a tad, while BusinessNZ M'fing PMI improved to 55.3 from 52.4, returning above the long-term average of 53.0.
  • NZD/USD last trades at $0.7094, little changed on the day. Bulls need a clearance of Dec 3 high of $0.7104 before targeting the upper 2.0% Bollinger band at $0.7135. Bears look for a dip through Dec 9 low/round figure of $0.7011/00 before taking aim at Nov 23 low of $0.6897.
  • Focus next week moves to Westpac Consumer Confidence (Tuesday), GDP & BoP current account balance (Wednesday), as well as ANZ Consumer/Business Confidence Surveys & trade balance (Friday).

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