New Zealand dollar trades above 61 US cents
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Daily Currency Update
The New Zealand dollar is slightly stronger when valued against the Greenback, currently trading at 0.6110 at time of writing. On the data front, yesterday's Stats NZ revealed the latest Consumer Price Index (CPI) data, showing a huge slowdown from 5.6 per cent in the year to September 2023. Food and transport prices fell in the last quarter of 2023, driving lower inflation. At 4.7 per cent, CPI is still above the Reserve Bank of New Zealand's target band of 1-3 per cent. However, the fall should end speculation that the RBNZ could be planning a fresh hike of the official cash rate (OCR), which sits at 5.5 per cent. Its next decision on Kiwi interest rates will come at the bank's next monetary policy committee meeting on February 28. The government made the restoration of the RBNZ's single mandate, to fight inflation, its first piece of legislation on taking office in November. The annual inflation rate is at its lowest since June 2021, while quarterly inflation was measured at 0.5 per cent, the smallest rise since December 2020. CPI inflation in New Zealand peaked at 7.3 per cent in 2022. There are no scheduled releases in New Zealand for the rest of this week.Key Movers
In the US, S&P Global released flash readings of PMI reports for January. Manufacturing PMI improved from 47.9 in December to 50.3 in January, compared to analyst consensus of 47.9. Numbers above 50 show expansion. At the same time, the report indicated that the improvement in operating conditions came amid a further drop in production. Services PMI increased from 51.4 in December to 52.9 in January, despite analysts expecting that it would decline to 51. Composite PMI grew from 50.9 to 52.3, easily beating analyst estimates. Treasury yields moved higher after the release of the reports. The US economy remains in good shape, so the Fed has the opportunity to keep rates at high levels to put additional pressure on inflation. The US Dollar Index moved back above the 103.00 level as traders reacted to PMI data. Rising Treasury yields provided material support to the American currency.Overnight in the UK, the GBPUSD climbed during the mid-North American Wednesday session after economic data suggested the UK’s economy remains solid after a release of strong PMI figures. UK Flash PMIs for January revealed by S&P Global showed that economic activity gathered steam, with Manufacturing PMI rising from 46.2 to 47.3 while the Services index jumped from 53.4 to 53.8. Consequently, the S&P Global Composite PMI rose from 52.1 to 52.5 hitting a 7-month high. Ahead of the week, the UK economic calendar is light, though the US docket would feature GDP and the Fed’s preferred gauge for inflation, the Personal Consumption Expenditures (PCE).
Expected Ranges
- NZD/USD: 0.6000 - 0.6200 ▲
- NZD/EUR: 0.5500 - 0.5700 ▼
- GBP/NZD: 2.0700 - 2.0900 ▲
- NZD/AUD: 1.0650 - 1.0850 ▲
- NZD/CAD: 0.8160 - 0.8360 ▼