Home Daily Commentaries New Zealand dollar rallies to a three month high

New Zealand dollar rallies to a three month high

Daily Currency Update

NZD - New Zealand Dollar

The New Zealand dollar is stronger this morning when valued against the greenback. The Kiwi dollar ended the week above 0.7150 for the first time in almost three months. Taking its gain on the week to over 2%, and closing at around 0.7460. Local Covid-19 cases continue to trend lower with 28 announced on Friday and 20 on each of Saturday and Sunday, an encouraging fall from the 80+ levels seen midweek. The trend lower in new cases has given the market greater confidence that the country will move down the Covid alert levels in time.

On the data front this week in New Zealand the macroeconomic calendar is very light. Domestic economic data this week is second tier and unlikely to be market moving. On Monday we will see the release of the ANZ Commodity Price Index which tends to have a muted impact because the tightly-correlated Australian commodity prices are usually released a few days earlier. On Thursday we will see the release of Manufacturing Sales a quarterly survey measuring the level of economic activity. Finally on Friday we will see the release of monthly New Zealand Visitor Arrivals. From a technical perspective, the NZD/USD pair is currently trading at 0.7148. We continue to expect support to hold on moves approaching 0.7129 while now any upward push will likely meet resistance around 0.7181.

Key Movers

Friday’s US August Nonfarm Payrolls report came in quite mixed as the country added just 235K new jobs in the month vs the 750K expected. The unemployment rate contracted to 5.2% as expected, while the participation rate remained unchanged at 61.7%. The spread of the Delta variant in the US is the obvious culprit, with sectors such as leisure and hospitality, where the risks of infection are greater, seeing big slowdowns in hiring. The poor figures fuelled further ongoing speculation that the US Central Bank will have to maintain its ultra-loose monetary policy for longer to the detriment of the US dollar.

On Monday we are expecting a quiet session ahead with the US market closed for the Labor Day holiday. The US will not release first-tier data and has quite a light macro-week. The focus will be on employment-related data in the form of weekly unemployment claims and inflation figures, as the country will release the August Producer Price Index, expected to decline to 7.3% YoY.

Expected Ranges

  • NZD/USD: 0.7050 - 0.7250 ▲
  • NZD/EUR: 0.5900 - 0.6100 ▲
  • GBP/NZD: 1.9670 - 1.9870 ▼
  • NZD/AUD: 1.0300 - 1.0500 ▲
  • NZD/CAD: 0.8850 - 0.9050 ▼