Home Daily Commentaries NZD struggles to break US$0.65 as support and resistance levels firm

NZD struggles to break US$0.65 as support and resistance levels firm

Daily Currency Update

The New Zealand dollar maintained a narrow trading range through Thursday, struggling to consolidate a break above US$0.65 and edging marginally lower overnight. Having enjoyed a tight range all week the NZD showed little signs of breaking that trend as investors appear content in sidelining major bets until after next week's Federal reserve Policy update. Having touched intraday highs at US$0.6510, the NZD edged lower through the latter half of the overnight session following stronger than anticipated US fourth quarter growth and a downturn in weekly Jobless claims. Amid renewed US dollar demand the NZD was forced toward intraday lows at US$0.6460 before finding support and recouping most of the losses, edging back toward US$0.6490 on open. Closer inspection of headline US data points suggest while headline numbers remain steady, weakness across key sectors could indicate momentum is slowing.

Our attentions today turn to domestic business confidence surveys and any sign corporate confidence has improved following Decembers shockingly poor showing. We expect NZD will remain largely range bound tracking between US$0.6420 and US$0.6520

Key Movers

The Japanese yen was the weakest of majors through trade on Thursday giving up ground amid a backdrop of elevated global rates and expectations for an uptick in domestic inflation. The US dollar pushed through 130 to mark intraday highs at 130.61 before edging back toward 130.30 leading into this morning’s open. Stronger than anticipated US GDP data and a downturn in weekly jobless claims helped boost near-term demand for the USD. The world’s largest economy grew nearly 3% in the fourth quarter of 2022, spurred by sustained consumer demand. While consumer spending drove growth, a closer inspection of key US input indicators suggests the US economy is slowing down. Elevated consumer spending did slow when compared with activity through Q3 and action across retail and business investment plummeted. Inventory and building growth remained flat and while Jobless claims continued to run below expectations they do not reflect a string of recent layoffs. Continuing jobless claims are rising, suggesting it is taking longer now to find a job than it was 12 months ago, a sure sign cracks are appearing in the labour market.

In other news the Canadian dollar was the strongest of the majors as oil prices provided upside support following the Bank of Canada’s decision to take stock and pause its tightening cycle.

With little of note on today’s ticket, outside Tokyo CPI data, our attentions turn to next weeks Fed and ECB policy updates.

Expected Ranges

  • NZD/USD: 0.6420 - 0.6520 ▼
  • NZD/EUR: 0.5920 - 0.5980 ▲
  • GBP/NZD: 1.8980 - 1.9220 ▼
  • NZD/AUD: 0.9080 - 0.9150 ▼
  • NZD/CAD: 0.8580 - 0.8700 ▼