Home Daily Commentaries NZD loses seven-week uptrend momentum as market mood adjusts

NZD loses seven-week uptrend momentum as market mood adjusts

Friday 9 December, 2022

Daily Currency Update

The New Zealand dollar has retreated to US$0.6342 whilst recording its first daily loss in the last three days. Some analysts have discussed the possibility of crediting this weakness to Fonterra, the world’s largest dairy exporter, recently downward revising its dairy pricing predictions. Reuters reported that Fonterra Co-operative Group Ltd has lowered its milk price projection range for 2022-2023 off the back of rising costs and weaker demand for whole milk powder. Reports have indicated that Fonterra will now pay farmers approximately NZ$8.50 to NZ$9.50 per kg/MS, a NZ$0.50 drop since August. On the other hand, a bounce back for US Treasury bond yields and blended signals from China and Russia have helped the US combat some negative resulting from lackluster domestic economic data. Jobless Claims had risen as forecasted to 230,000 in the week ending December 3. Continuing Claims also increased by 62,000 to 1.671 million in the week ending November 26, which was 96,000 more than what the market had forecasted, the highest level since February

Key Movers

The US dollar has lost territory versus most of its key competitive majors before consolidating for the remainder of the US session, with the improved US stocks sentiment providing some support. The aforementioned increase in jobless claims and continuing claims were not taken favourably by the market whilst looking at other domestic growth areas which may combat rising inflation worries. In the absence of top-tier numbers and ahead of next week’s central bank decision, volatility has enjoyed a decline as the market is uncertain of the monetary policy movements to be expected. The market awaits the US Federal Reserve, European Central Bank, the Swiss National Bank, and the Bank of England providing updates on monetary policy next week. The GBP/USD and EUR/USD pairs have both reasonably tracked sideways for the last eight days, however, gains have been posted on the day of 0.35% and 0.49% respectively. The CAD/USD pair appreciated a push upward as general USD weakness prevailed. Deputy Governor of the Bank of Canada, Sharon Kozicki has advised that the bank will act strongly if required to adjust interest rates, following a review of recent economic data. Nothing to note on the JPY front with minimal movements seen on the day, currently trading at 135.67. The Chinese yuan has been able to hold onto its run higher, which started on November 27 as China continues to ease its Covid-zero policy and begin its path back to normality. Looking ahead, China will be reporting its consumer price index for November this Friday with the market forecasting an increase of 1.5% p.a., alongside the US announcing wholesale inflation data through their PPI release.  

Expected Ranges

  • NZD/USD: 0.6325 - 0.6400 ▲
  • NZD/EUR: 1.6583 - 1.6501 ▼
  • GBP/NZD: 1.9150 - 1.9260 ▼
  • NZD/AUD: 0.9415 - 0.9470 ▼
  • NZD/CAD: 0.8620 - 0.8700 ▼