• Most of the news flow over the course of the past week was better than expected, with economic data beating expectations both domestically and internationally.  Numerous earnings reports were favourable, helping equity markets firm, and the latest Consensus Economics estimates for global GDP growth were revised up.
• During the week New Zealand’s retail sales figures for May were stronger than expected, and the Consumer Price Index (CPI) rose 0.6%, taking the annual pace of inflation to 1.9%.  
• The market was surprised last week when New Zealand’s long-term sovereign credit rating outlook was cut to negative from stable by Fitch Ratings.  The NZD immediately dropped 50 pips following the announcement of the outlook downgrade, but later recovered to pre-announcement levels, buoyed by an improvement in risk appetite and a rally in US equities.

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