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New Zealand business confidence slumps in March

Bank data released on Thursday shows New Zealand’s business confidence fell even further in the month of March, dragging the New Zealand dollar down.

ANZ bank data has shown New Zealand’s business confidence came in at -38 in March, higher than expectations.

The number came in 14.3 points higher than markets expected, as business confidence had been priced to come in at -24.3.

Survey data showedt a net 38% of respondents expected the economy to deteriorate over the year, jumping higher than 30.9% of respondents in February.

The data also showed less respondents expected their business to grow within the year, with only 6.3% having optimistic outlooks. The number came in lower compared to 10.5% of respondents in February.

New Zealand dollar price

The New Zealand dollar was affected by the ANZ data, falling to the lowest level it has seen since February 8.

NZD/USD fell to $0.6780 at time of writing, falling almost 0.10%.

Interest rate cut expectations

Analysts say the weak business sentiment will likely boost expectations of an early rate cut by the New Zealand central bank.

Markets have priced in a 71% chance of a rate cut in August, following on from the central bank's recent dovish tone.

Reserve Bank of New Zealand in focus

ANZ 's business confidence data comes a day after New Zealand’s central bank took markets by surprise, stating the next move in interest rates could be down.

Analysts believe one of the reasons the central bank moved away from its long-standing neutral bias could be the recent deterioration in economic conditions and business sentiment.

While the business confidence indicator fell more-than-expected in March, it also validated the New Zealand central bank’s dovish tone on interest rates.

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