Housing is one of the premier measures of real-world effects of monetary policy and changes in interest rates. It’s also a gauge of disposable income. This is why traders are keeping an eye on the Canadian housing market since it often mirrors the situation in the US.
Overnight we have electronic card transactions from New Zealand. Lately, this has been providing more volatility to NZD pairs. This is because it’s sort of a replacement for consumer spending and confidence data that is only available on a quarterly basis.
There are two events that could move the CAD side of pairs today. The first is the New Housing Price Index coming out at 14:30 CET (or 08:30 EST). Expectations are for this to decline by another 0.1% (it did the same last month).
New house prices had been largely stable during the last year. However, they started to slip at the end in concert with the markets. This is the opposite direction of the rest of Canada’s outlook, which increasing crude prices have largely supported since oil is Canada’s major export. Rising borrowing costs are often cited to blame for lack of interest in housing, a sign of tightening in liquidity for housing.
Liquidity will be of interest for traders following BOC Sr. Deputy Governor Carolyn Wilkins‘ speech at the World Bank later. We can expect her to keep her hawkish stance. The speech will begin at 19:00 CET (or 13:00 EST) and a text of the speech will likely be published just ahead of it.
If not, then there might be a delay for her remarks. And this would move market reaction forward. Note that we also expect Deputy Governor Lane to give a speech at the same event tomorrow. And the governor is likely to mirror Wilkin’s comments.
New Zealand Data
The Kiwis also have two important events for the markets. These are the Manufacturing Index from BusinessNZ at 00:30 on Friday CET (which would be 18:30 on Thursday EST), and then 15 minutes later, electronic card transactions and visitor arrivals.
The BusinessNZ index is New Zealand’s PMI. And expectations are for it to remain quite firmly in expansion territory at 54.4. This would be an increase over the 53.7 registered prior. However, manufacturing is a relatively small component to the Kiwi economy, with most of the production targeted at the domestic market. Therefore, this also serves as another indicator of consumer demand.
Next, we have the major event which is the month over month electronic card sales. Forecasts are for these to increase by 0.7% from the jump of 0.9% registered last time around. This data series has twice solidly outperformed market expectations, which have been a bit spooked with surprisingly bad performance in December.
However, that seems to have turned out to be a one-off. Consumer sentiment has returned to the top end of the normal range. Part of that could be due to the raft of negative economic press during December, that has since changed. Despite the good month over month data, the annualized rate remains below forecasts and at the middle of the usual growth range.
The tourist season is winding down in New Zealand. And this season saw a record number of tourist arrivals despite the discouragement of travel from China due to internal economic issues. Tourist arrivals contribute a large share of foreign cash flows into the country, which typically help support the NZD.