NZD yawned as the Reserve Bank left rates untouched (in line with consensus projections). The central bank governor Alan Bollard provides some color on the New Zealand recovery, noting a recovery in export partners (which he believes is sustainable), flattening consumer demand and a recent increase in housing prices. He goes on to note that sustained growth is contingent on the export sector and household savings.
Nothing revolutionary here as the focus on the current account continues but we have to believe volatility in NZD rates is currently being underpriced. With the strength and diversity of various China bear factions at this point, it's almost a foolproof bullish indicator. Additionally, some exports may be more downturn-proof than we believe (e.g. milk powder, see the ZH piece on NZ May trade data). The flip side also begs a simple question: how much lower can they go? It is almost inconceivable for NZD to go ZIRP.