Home Daily Commentaries New Zealand dollar continues to trade above US$0.61

New Zealand dollar continues to trade above US$0.61

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.

| Monday 11 March, 2024

Daily Currency Update

The New Zealand dollar is stronger this morning when valued against the Greenback, currently trading at US$0.6176 at time of writing. The Kiwi rallied above the mid-US$0.6100s during the early Asian session on Friday. At its February meeting last week, the Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged at 5.5% and stated that it will keep monetary conditions tight in the near term to further bring down inflation.

RBNZ Chief Economist Conway said on Wednesday that the Fed rate cuts could drive up the New Zealand dollar and reduce inflationary pressure. Conway added that the RBNZ might cut interest rates sooner than expected if the Fed begins easing later this year.

Looking ahead this week, there are no scheduled releases today in New Zealand. On Wednesday, Statistics New Zealand will release the monthly Food Price Index (FPI). Although food is among the most volatile consumer price components, this indicator garners some attention because New Zealand's major inflation data is released quarterly. On Thursday we will see the release of the monthly Visitor Arrivals. Tourism plays an important role in the economy, about 7% of the population is employed by the tourism industry, and a sizable portion of the nation's GDP is indirectly related to tourism.

Finally, on Friday BusinessNZ will release the Manufacturing Index a survey of manufacturers that asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

Key Movers

In the US on Friday the survey of establishments showed that Nonfarm payrolls increased by 275,000 jobs last month, and the economy created 167,000 fewer jobs in December and January than previously estimated. Economists polled by Reuters had forecast 200,000 jobs added in February, with estimates ranging from 125,000 to 286,000. Payrolls are more than double the roughly 100,000 jobs needed per month to keep up with growth in the working-age population.

U.S. job growth accelerated in February, but that likely masks underlying softening labour market conditions as the unemployment rate increased to 3.9%, a two-year high. The Labor Department's closely watched employment report on Friday also showed that wages rose moderately last month.

The jump in the unemployment rate after holding at 3.7% for three straight months reflected a further decline in household employment. The mixed report boosted the odds of the Federal Reserve cutting interest rates by June. Financial markets saw an 80% chance of a first-rate cut by June, up from 75%, before the report was released.

Since March 2022, the U.S. central bank has raised its policy rate by 525 basis points to the current 5.25%-5.50% range. Fed Chair Jerome Powell told lawmakers this week that rate cuts would "likely be appropriate" later this year, but emphasized they "really will depend on the path of the economy."

Expected Ranges

  • NZD/USD: 0.6075 - 0.6275 ▲
  • NZD/EUR: 0.5550 - 0.5750 ▲
  • GBP/NZD: 2.0700 - 2.0900 ▼
  • NZD/AUD: 0.9230 - 0.9430 ▼
  • NZD/CAD: 0.8235 - 0.8435 ▲

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.