NZD faces challenges in sustaining upward momentum, remaining near US$0.62

Daily Currency Update

The NZD/USD is facing challenges in extending its gains as it enters today’s early market session, hovering near the 0.6200 level. After a bullish surge that pushed the pair beyond 0.6280, momentum fizzled out, causing the currency pair to retreat into a short-term consolidation phase. Despite a widespread decline of the US dollar (USD) following a dovish shift in stance from the Federal Reserve (Fed) on Wednesday, the New Zealand dollar (NZD) has struggled to leverage the overall market sentiment. This difficulty can be attributed to disappointing New Zealand Gross Domestic Product (GDP) figures released early Thursday, which fell short of expectations.

In the third quarter, New Zealand's GDP unexpectedly contracted by -0.3%, marking a significant decline compared to the previous quarter's 0.5% growth (revised down from 0.9%). This figure fell well below the anticipated 0.2%. The annualised GDP for the third quarter also experienced a downturn, registering at -0.6% instead of the expected 0.5% gain. This decline represents a setback from the previous period's 1.5% (revised down from 1.8%). The disappointing GDP results have adversely affected the New Zealand dollar (NZD), making it one of the weakest performers among major currencies, second only to the US dollar. Looking ahead, the Business NZ Purchasing Managers' Index (PMI) for November, scheduled for release in the early Friday Asia market session, is not expected to bring much optimism for NZD buyers. The NZ PMI recorded 42.5 in October.