Talking Points:

• NZ Dollar gapped lower after a string of negative data releases
• Business confidence down most since October 2015, says ANZ
• Negative news-flow spurred RBNZ interest rate cut speculation
• See how retail traders are positioned in the New Zealand Dollar with the DailyFX SSI.

  NZD/USD gapped lower at the start of the trading week after a string of weak economic data releases from New Zealand crossed the wires. A measure of business confidence from ANZ bank fell to 7.1 in February from 23 in the prior month, marking the largest drop since October. The same report said a gauge tracking the outlook for business activity fell to 25.5 from the 34.4 recorded in January, the sharpest decrease since August. A separate release showed Building Permits fell 8.2 percent last month, making for the biggest drawdown since September of 2014.

  The Kiwi tracked lower alongside New Zealand front-end bond yields, hinting that the news-flow fueled RBNZ interest rate cut speculation. For its part, ANZ Bank said it expects the central bank to cut rates twice this year, with easing due at the June and September policy meetings. Investors’ priced-in outlook (as reflected in overnight index swaps) envisions 38 basis points in rate cuts over the coming 12 months, implying at least one 25bps reduction and a 76 percent probability of second. The chance of a cut at the RBNZ’s March 9 meeting is priced at 29 percent.