NZ Dollar Soft as Manufacturing Expansion Slows

The New Zealand dollar was soft today, even though the market sentiment seemed to be positive for riskier commodity-related currencies. Somewhat negative domestic macroeconomic data might have contributed to the weakness of the New Zealand currency.
The seasonally adjusted BusinessNZ Performance of Manufacturing Index dropped sharply to 53.4 in February from 58.0 in January. While a reading above 50.0 indicates expansion, the drop signals that the pace of growth slowed considerably. BusinessNZ’s executive director for manufacturing Catherine Beard commented on the result:

Despite the PMI remaining in expansion, the proportion of those outlining negative comments stood at 54%, compared with 46% in January. Given the second recent partial lockdown, it remains to be seen what impact this will have on the sector over the next few months.

BNZ Senior Economist Craig Ebert elaborated further on the reasons for the slowdown:

Supply issues were to the fore from respondents’ comments to February’s PMI survey. Of those citing negative factors, supply rather than demand problems dominated, with frequent references to supply chains, shipping, freight, costs, and difficulties in finding suitable staff.

Released yesterday, a report from Statistics New Zealand revealed that food prices fell by 0.9% in February (0.6% with seasonal adjustments). Fruit and vegetable prices demonstrated the biggest decline, falling by 2.4% (2.2% after seasonal adjustments). Restaurant meals and ready-to-eat food prices was the only category to show at least some growth, rising by 0.3%. On an annual basis, fruit and vegetable prices demonstrated the biggest increase, rising by 5.1%. Meat, poultry, and fish prices showed the biggest drop, falling by 2.4%.
NZD/USD dropped from 0.7227 to 0.7193 as of 7:43 GMT today. GBP/NZD rose from 1.9352 to 1.9381. NZD/CAD declined from 0.9055 to 0.9036.
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Original from: www.earnforex.com