NZ House Prices Booming
New Zealand house prices rose 2.4% in March (+10.9% y/y) – the fastest monthly increase in six years. Finance Minister English said that if the boom continues, interest rates may have to rise. This resonated with a similar warning issued by RBNZ Deputy Governor Spencer on Monday, and NZDUSD eventually climbed on the back of this to 0.8600 overnight. Meanwhile, also lending support to our long-term short AUDNZD trade recommendation, Australia’s unemployment rate ticked higher to 5.6% in March – the highest it has been since November 2009. That alone is unlikely to trigger a rate cut, but should be enough to encourage the RBA to keep its easing bias in place. As a minimum this now increases the focus on the Q1 CPI release due on April 24th. Elsewhere, USDJPY continues to nudge closer to 100.00 in the wake of the FOMC minutes. The text suggested that a critical mass of committee members now favour slowing down the pace of QE3 asset purchases before end-2013. Meanwhile JGB volatility remains highly elevated in the wake of the BoJ policy easing a week ago. A 30y JGB auction was reasonably well-covered overnight however, suggesting short-term fears may be somewhat overdone.
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UBS