Retail sales data published earlier today showed a much larger than expected monthly drop of 2.5% in October and this news sent the NZD crashing with AUD/NZD trading at multi-year highs close to 1.3300.
New Zealand’s finance minister Bill English is now faced with the difficult task of stimulating the economy whilst also having to restrict spending. The RBNZ have been calling for fiscal restraint and the FinMin has said that he will restrict spending in next year’s budget. New Zealand’s cash deficit is set to widen nonetheless.
This does not look like a good situation for the NZD and we can expect to see the downward pressure to continue.
