Incase you were wondering why WOW was down today
https://www.copyright link/markets/currencies/kiwi-slumps-to-eight-month-low-against-a-on-rate-rise-bets-20240212-p5f47xThey are already struggling in NZ so this doesn't help, but there's still many good reasons to be bullish for WOW in NZ for long-term investment.
"The Australian dollar tumbled to its lowest level since May against the kiwi on Monday after ANZ economists tipped that the Reserve Bank of New Zealand would resume lifting rates this month due to persistent inflationary pressures.New Zealand central bankers added to speculation on Monday, with governor Adrian Orr telling a parliamentary committee that the country’s current inflation rate at 4.7 per cent was still too high, and the central bank remained wary of ongoing domestic inflation pressures.That helped push the New Zealand dollar below $1.06 as markets priced in further tightening by the RBNZ when other central banks around the world are looking to start easing monetary policy.ANZ is forecasting RBNZ governor Adrian Orr will have to hike rates twice this year. BloombergTraders moved to price in around 22 basis points of rate rises by May in New Zealand and have scaled back the number of rate cuts by year-end to around 36 basis points. The central bank, among the first to raise interest rates at end of 2021, last lifted the cash rate to 5.5 per cent in May – the highest among its peers.RBNZ deputy governor Christian Hawkesby also told the committee that New Zealand’s financial system remained strong and was well-placed to adjust to higher interest rates both globally and domestically.“The vast majority of households have continued to manage the debt and service their mortgages, although some are struggling and falling behind,” Mr Hawkesby added.The move in the kiwi followed ANZ’s prediction that the RBNZ would increase rates by 0.25 percentage points at its February 28 meeting, and again in April, taking the cash rate to 6 per cent.With the exception of Japan, the RBNZ is the only major central bank expected by the market to hike this year.ANZ said New Zealand’s central bank would not cut rates until February 2025, ultimately taking the cash rate back to 3.5 per cent.“February is a line-ball call,” wrote ANZ’s chief economist for New Zealand, Sharon Zollner. “If they don’t hike in February, we think they will in April, unless we start to see meaningful downside surprises.”In November, the RBNZ flagged the risk of a rate increase this year if inflationary pressures were stronger than anticipated.Since then, New Zealand has reported solid consumption growth in its third-quarter GDP figures, an upward surprise in fourth-quarter non-tradable inflation, higher-than-expected net migration, and a recovery in commodity prices and high-frequency activity data.‘Unwelcome surprises’And last week, fresh data showed that New Zealand’s jobless rate nudged up to 4 per cent in the fourth quarter from 3.9 per cent in the third, and below economist forecasts of 4.3 per cent. Employment gained 0.4 per cent from the prior three months, beating estimates of 0.3 per cent growth.ANZ acknowledged that while none of the economic data released since November have been “game changers”, there had still been a “cumulation of small but unwelcome surprises”.Capital Economics, however, pushed back against speculation that the lingering resilience in New Zealand’s labour force could prompt the RBNZ to resume its tightening cycle.“With leading indicators pointing to a substantial rise in labour market slack in the months ahead, we doubt the RBNZ will jump the gun on further rate hikes,” said Abhijit Surya, Australia and NZ economist at Capital Economics.The RBNZ has lifted rates by 5.25 percentage points since October 2021 to bring inflation back to its target band of 1 per cent to 3 per cent.Westpacs’ economic team expects New Zealand’s central bank will keep interest rates on hold for a “long period” before they start to cut rates in February next year.“Interestingly, a rate cut in November is seen as a 100 per cent chance, implying there will be a dramatic reversal in RBNZ stance,” Westpac wrote in a report to clients.“We expect market pricing will remain volatile, and guess that it will look quite different in a few months’ time.”
(20min delay)