New Zealand dollar trades below US$0.60
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Daily Currency Update
The New Zealand dollar is weaker this morning when valued against the Greenback, currently trading at US$0.5949 at the time of writing. The NZD/USD pair remains under some selling pressure after retracing from the US$0.60 barrier during the Asian session on Friday. The dovish comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr weigh on the New Zealand dollar. The Kiwi asset is vulnerable in the broader term as the New Zealand economy has shifted into a technical recession.RBNZ Governor Orr said the central bank is on track to getting inflation back into the target band while adding that interest rates have peaked and cuts are getting closer. The RBNZ indicated that it may cut rates from early next year. However, the Kiwi dollar was bolstered by positive Chinese Purchasing Managers Index (PMI) figures, revealing that in March Chinese manufacturing activity witnessed its first expansion in six months.
On Monday, China’s Caixin Manufacturing PMI came in at 51.1, against the expected 51.0 and 50.9 prior. On Sunday, China's National Bureau of Statistics (NBS) Manufacturing PMI rose to 50.8 in March from 49.1 in the prior month. The NBS Non-Manufacturing PMI increased to 53.0 in March from 51.4 in February. Looking ahead this week and on Thursday, Building Permits will be released by Statistics New Zealand.
Key Movers
Two reports out Monday showed that the US manufacturing sector is in its strongest position since 2022. The Institute for Supply Management's manufacturing PMI indicated the manufacturing sector moved into expansion for the first time since September 2022 in March. A measure from S&P Global showed production hit a 22-month high last month as the US economy continues to impress.According to Bloomberg data, the ISM's manufacturing PMI registered a reading of 50.3 in March, up from February's reading of 47.8 and higher than the 48.3 economists expected. In reaction to ongoing US economic resilience, the odds for a rate cut in June's meeting dropped from 85% to around 65%. The dollar index, which measures the U.S. currency against six rivals, was 0.4% higher at 104.99.
On Friday, the Commerce Department's Bureau of Economic Analysis said the personal consumption expenditures (PCE) price index rose 0.3%, compared with the 0.4% rise that economists polled by Reuters had forecast. The Dow Jones Industrial Average dipped on Monday to kick off the second quarter, with traders weighing fresh U.S. inflation data amid fears that the market rally could slow down.
The Dow lost 264 points or 0.7%, while the S&P 500 shed 0.3%. The tech-heavy Nasdaq Composite dipped less than 0.1%. Investors remain cautious about the pace of the Federal Reserve’s rate-cutting timeline this year and how soon central bankers will be able to meet their 2% inflation target. On Friday, Federal Reserve Chair Jerome Powell said that economic growth remains strong and inflation is still above target.
Expected Ranges
- NZD/USD: 0.5850 - 0.6050 ▼
- NZD/EUR: 0.5440 - 0.5640 ▼
- GBP/NZD: 2.1000 - 2.1200 ▲
- NZD/AUD: 1.0800 - 1.1000 ▼
- NZD/CAD: 0.8000 - 0.8200 ▼