Home Daily Commentaries New Zealand dollar falls below 61 US cents

New Zealand dollar falls below 61 US cents

Brett Ottawa
Written by
Brett Ottawa

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market.

| Thursday 29 February, 2024

Daily Currency Update

The New Zealand dollar is weaker this morning when valued against the Greenback, currently trading at 0.6094 at time of writing. The Reserve Bank of New Zealand (RBNZ) surprised investors yesterday by appearing less inclined to raise interest rates further, sending the local currency and bond yields lower as traders sharply trimmed the chance of further tightening. The central bank left, as expected, the cash rate on hold at a 15-year high of 5.5 per cent, where it has been since May last year. It also lowered its cash rate peak forecast to 5.6 per cent, from 5.69 per cent previously, indicating little prospect of lower rates before mid-2025. In its statement, the RBNZ reiterated that it needs to keep policy restrictive for a while to bring inflation below its 1% to 3% target band.

Looking ahead, we will see the release of the ANZ Business Confidence, a survey of about 1,500-2,000 businesses that asks respondents to rate the relative 12-month economic outlook. Reserve Bank of New Zealand Governor Adrian Orr is due to testify on the Monetary Policy Statement before the Finance and Expenditure Committee, in Wellington. On Friday, Statistics New Zealand will release the latest monthly Building Consents a leading gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building.

Key Movers

On the US front, US Gross Domestic Product (GDP) grew at an annual rate of 3.2% in the fourth quarter, the US Bureau of Economic Analysis (BEA) said in its second estimate on Wednesday. The BEA reported in its advanced estimate the real GDP growth was 3.3%. ‘The increase in real GDP reflected increases in consumer spending, exports, state and local government spending, non-residential fixed investment, federal government spending, and residential fixed investment that were partly offset by a decrease in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.’ Looking ahead, all eyes will be on today's highly anticipated release of the Personal Consumption Expenditure (PCE) price index for January, as it serves as the Federal Reserve’s preferred barometer for inflation. Currently, markets are pricing in a 63% chance of a Federal Reserve interest rate cut by June, with the likelihood increasing to 84% for a cut by July. Furthermore, there’s an anticipation of approximately 85 basis points in cumulative interest rate reductions by December 2024, suggesting the market expects slightly more than three 25 basis point cuts.

Expected Ranges

  • NZD/USD: 0.6000 - 0.6200 ▼
  • NZD/EUR: 0.5530 - 0.5730 ▼
  • GBP/NZD: 2.0650 - 2.0850 ▲
  • NZD/AUD: 1.0550 - 1.0750 ▼
  • NZD/CAD: 0.8170 - 0.8370 ▼

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.