NZD spurned as USD rises

<p>Kia ora,</p><p>Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news we have been re-rated lower on currency markets.</p><p>We start today noting the US dollar is surging higher in markets convinced the US Fed will start reducing some of its money printing operations soon. The NZD has been particularly hard hit by the move, undermined by the perception offshore that we are losing the pandemic struggle.</p><p>In the US, the number of<strong> </strong><a href="https://www.nar.realtor/newsroom/pending-home-sales-recover-8-1-in-august" target="_blank"><strong>signed contracts to buy existing homes</strong></a> in the US recovered +8.1% in August from July, reversing two months of declines. More sellers are coming into this market.</p><p>But last week, American <a href="https://www.mba.org/2021-press-releases/september/mortgage-applications-decrease-in-latest-mba-weekly-survey-x285442" target="_blank"><strong>mortgage applications</strong></a> actually fell and <a href="http://www.freddiemac.com/pmms/" target="_blank"><strong>home loan interest rates rose</strong></a> slightly. So perhaps the September house sales won't be as strong.</p><p>In China, their central bank injected liquidity into their banking system for a ninth consecutive day, adding <a href="http://www.pbc.gov.cn/zhengcehuobisi/125207/125213/125431/125475/4352425/index.html" target="_blank"><strong>NZ$22 bln today in reverse repo transactions at 2.35%</strong></a>. But it isn't unusual for them to juice their financial system at this time, ahead of next week's National Day holidays. What is unusual is the quantum that is building up, juiced by the Evergrande contagion.</p><p>EU <a href="https://ec.europa.eu/economy_finance/db_indicators/surveys/documents/2021/bcs_2021_09_en.pdf" target="_blank"><strong>economic sentiment</strong></a> edged higher in September after a fall in August, boo