The NZD sits a little higher at 0.8280 this morning. Yesterday’s ANZ commodity price index showed world prices for NZ’s main primary export products rose 1.3% in October. Prices were 22.9% higher than a year ago. A recent pattern was seen i.e. a broadening in the products that are experiencing price gains. Overall the result supports our view that the terms of trade will push on to a 40 year high in Q4 this year. The relative price shift in favour of what NZ exports compared to what NZ imports is having a significant positive effect on the purchasing power of the nation’s income. It is certainly consistent with current high business and consumer confidence. It is also one of the pillars of our view that the NZD will be well-supported into year end. The NZD/USD sits at 0.8280 this morning. We see it at 0.8400 at year-end.
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BNZ