During early Asian deals on Thursday, the New Zealand dollar surged up against its major counterparts after the New Zealand Finance Minister Bill English has announced sweeping reforms to the country’s tax system to encourage savings and reduce the public deficit in his 2010 Budget.
The reforms include a 15% hike in the sales tax from 12.5%, while personal taxes will be cut and benefit payments will be raised. The new measures come into effect from October.
The announcements were widely expected by analysts.
In a less anticipated move, English announced that the company tax will be cut to 28% from 30% from next April onwards to encourage investment and raise competitiveness.
English called the reforms the most significant overhaul of the tax system in the last 25 years.
The New Zealand dollar climbed against the Australian dollar in early Asian deals on Thursday. The aussie-kiwi pair that closed yesterday’s trading at 1.2504 is currently worth 1.2309. This set the highest point for the kiwi since October 28, 2009. On the upside, 1.204 is seen as the next target level for the kiwi.
The Aussie plunged as a report showed that Australia’s consumer inflationary expectations dropped in May.
Australia’s median consumer inflationary expectations slid to 3.6% in May from 4.1% in April, the Melbourne Institute said. Michael Chua, a research fellow at the Melbourne Institute, said the fall in the expectations index probably reflects concerns that the sovereign debt crisis in Europe might affect the domestic economy.
During early Asian deals on Thursday, the New Zealand dollar rose against the currencies of US and Japan. At present, the kiwi is worth 0.6874 against the greenback and 63.10 against the yen, compared to yesterday’s close of 0.6785 and 62.19, respectively. If the kiwi advances further, it may likely target 0.704 against the greenback and 65.3 against the yen.
Japan’s gross domestic product added 1.2 percent in the first quarter of 2010 compared to the previous three months, the Cabinet Office said in a preliminary report today. That was slightly below analyst expectations for a 1.4 percent gain following the revised 1.0 percent increase one quarter earlier.
On an annualized basis, GDP was up 4.9 percent for the fourth straight quarter of gain – but again missing forecasts for a 5.5 percent increase after the revised 4.2 percent gain in the previous three months.
The New Zealand dollar strengthened against the euro during early Asian deals on Thursday. Presently, the kiwi is worth 1.7977 per euro and the next upside target level for the NZ currency is seen at 1.754. The euro-kiwi pair closed Wednesday’s trading at 1.8318.
In the upcoming European session, German PPI for April and the Italian industrial sales for March have been slated for release.
Across the Atlantic, the U.S. weekly jobless claims data for the week ended May 15, leading indicators for April and the results of the Philadelphia Federal Reserve’s manufacturing survey for May are expected in the North American session.