New Zealand dollar falls below US$0.61
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Daily Currency Update
The New Zealand dollar is weaker when valued against the Greenback currently trading at 0.6031 at the time of writing. The Kiwi dollar faced strong downward pressure on Friday on the back of surprisingly strong US Non-Farm Payroll data figures. On Friday applications to build new homes have fallen sharply, but a rider has come out with the new data that the sector is coming off an all-time peak. StatsNZ information showed consents were issued for 37,000 new residences in the year to December, down 25 per cent from the 49,538 consents issued a year ago. Consents for townhouses, apartments, retirement village units and flats dominate consents.Looking ahead this week in New Zealand and today we will see the release of the Australia and New Zealand Banking Group (ANZ) monthly Commodity Prices which measures the average price of the nation's main commodity exports are sampled on the global market and then compared to the previous sampling. On Wednesday, February 7, Statistics NZ will release the suite of labour market figures for the December quarter, including the unemployment numbers and latest wage information. Cooler conditions in what has been a raging hot labour market have been seen as vital as part of the RBNZ's attempts to get inflation back into its targeted 1% to 3% range and - explicitly, to the 2% midpoint. The December quarter inflation figures themselves have already been released and were on the face of it very encouraging, with the Consumers Price Index (CPI) showing an annual rate of growth of 4.7%, down from 5.6% as of the September quarter. Remember, the CPI peaked at 7.3% in June 2022 but has previously been falling only slowly. In its most recent forecast contained in the November Monetary Policy Statement (MPS), the RBNZ forecast unemployment of 4.2% for the December quarter, then rising to 4.6% by the March 2024 quarter, 4.9% by June 2024 and 5.0% by September 2024. The RBNZ forecasts a peak level of unemployment of 5.2% in June 2025.
Key Movers
In the US on Friday the US economy added 353,000 jobs in January, according to the Bureau of Labor Statistics, far outstripping expectations for 180,000 new payrolls. Jobs growth in January marked an increase on the December figure of 333,000, upwardly revised from an initial estimate of 216,000. The unemployment rate was unchanged at 3.7% in January. On top of that, average hourly earnings rose 0.6%MoM/4.5% YoY, whereas the market had been predicting only a 0.3% increase. This combination of strong jobs and wages with unemployment falling indicates clear strength in the US economy and even though inflation is still tracking towards 2% the Federal Reserve simply won’t consider cutting rates at the March FOMC meeting.US shares powered higher, with the S&P 500 resetting its record high, fuelled by a stunning 20 per cent leap in Facebook parent Meta Platforms as well as a 7.9 per cent gain for Amazon. That came even as the yield on the US 10-year note spiked above 4 per cent. On the day, the S&P 500 was 1.07 per cent up to 4958.61; it peaked earlier at 4975.29. The Nasdaq Composite rose 1.7 per cent; the Dow Jones gained 0.4 per cent. Iron ore, oil and gold each were lower. Iron ore’s decline reflected in part by poor margins for Chinese steel mills and subdued demand heading towards China’s February 10-17 New Year break, according to Mysteel.
Expected Ranges
- NZD/USD: 0.5900 - 0.6100 ▼
- NZD/EUR: 0.5500 - 0.5700 ▼
- GBP/NZD: 2.0550 - 2.0750 ▲
- NZD/AUD: 1.0600 - 1.0800 ▼
- NZD/CAD: 0.8000 - 0.8200 ▼