Home Daily Commentaries New Zealand dollar trades below 61 US cents

New Zealand dollar trades below 61 US cents

Monday 5 September, 2022

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the greenback. The Kiwi dollar fell to a 2-year low on Friday, just above 0.6050, but briefly recovered back to 61 US cents by the end of the week. Domestically on Friday, we saw the release of the quarterly Overseas Trade Index which calculates the volume of imports that can be purchased with an equal volume of exports. The terms of trade fell 2.4 percent, whereas export prices rose 3.7 percent and import prices rose 6.5 percent. Total export services rose from $137 million to $4.1 billion in the June 2022 quarter compared with the June 2021 quarter. While the total import services rose from $1.5 billion to $6.1 billion in the June 2022 quarter compared with the June 2021 quarter. The total two-way trade for the June 2022 quarter was $48.9 billion. Looking ahead this week and there is just second-tier data released including a number of GDP partial indicators which will help us firm our forecast for Q2 GDP growth (currently 1.5% q/q penciled in). On Monday we will see the release of the Australia and New Zealand Banking Group (ANZ) Commodity Price Index which looks at the average price of the nation's main commodity exports sampled on the global market and then compared to the previous sampling. On Wednesday we will see the release of the Global Dairy Trade (GDT) which is a leading indicator of the nation's trade balance with other countries because rising commodity prices boost export income. Finally, on Thursday, we will see the release of the quarterly Manufacturing Sales.

Key Movers

US stocks opened higher on Friday after the release of the key August jobs report pre-market did not bring any major surprises. The Dow closed down 338 points, 1.1%, at 31,319, the Nasdaq Composite lost 154 points, 1.3%, to 11,631 and the S&P 500 slipped 42 points, 1.1%, to 3,924. Investors couldn't make a mini-rally, prompted by promising jobs data for August, last more than a half day. The household survey (used to generate the unemployment rate) was quite impressive. It reported employment rising by 442,000. However, the eye-catching thing was the jump in worker participation to 62.4% from 62.1%, with the civilian labour force increasing by 786,000 in August. The highly anticipated non-farm payrolls report showed that the nation added 315,000 jobs in August, slightly above the consensus analyst expectation of 300,000. Unemployment, which was forecast to remain stable at 3.5%, unexpectedly rose to 3.7%. Markets continue to price in a 75 bps rate hike at the September FOMC meeting which takes place on September 20-21.

Expected Ranges

  • NZD/USD: 0.5950 - 0.6150 ▼
  • NZD/EUR: 0.6050 - 0.6250 ▼
  • GBP/NZD: 1.8800 - 1.9000 ▲
  • NZD/AUD: 1.1000 - 1.1200 ▼
  • NZD/CAD: 0.7900 - 0.8100 ▲