New Zealand dollar trades below US$0.63
Monday 22 May, 2023
Daily Currency UpdateThe Kiwi dollar is stronger this morning when valued against the Greenback. The Kiwi dollar was the best performing developed market currency over the course of last week with widening yield differentials seemingly offering support. The NZD/USD pair recovered some ground and hits a new weekly high of 0.6290 amidst an upbeat market sentiment sponsored by improvement in US debt ceiling talks and a softer US dollar (USD). That helped the New Zealand dollar (NZD) to offset some of its weekly losses, reclaiming its recovery from the 200-day EMA. At the time of writing, the NZD/USD is trading at 0.6268. Meanwhile, the NZD continued its recent outperformance relative to the AUD, with NZD/AUD climbing back above 0.9400 to match the 2023 highs from back in March.
Looking ahead this week and all eyes will be on the Reserve Bank of New Zealand's official cash rate (OCR) announcement on Wednesday. Official interest rates in New Zealand have increased from a record low of 0.25% (March 2020 to October 2021) to 5.25% by April 2023. Westpac’s economics team now believes the Reserve Bank of New Zealand will need to lift the Official Cash Rate (OCR) to as high as 6% – a new high projection among big bank economists. The OCR is currently sitting at 5.25%, and most economists expect another 0.25% increase at the review next week, bringing the OCR to 5.50%. Also on Wednesday Statistics New Zealand will release quarterly Retail Sales figures, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Key MoversWall Street’s best week since March ran out of steam on Friday as worries rose about the US government’s efforts to avoid a potentially disastrous default on its debt. The S&P 500 slipped 0.1%, the Dow Jones fell 0.3% while the Nasdaq gave up 2%. Despite its weak Friday, the S&P 500 still managed to break out of a long, listless stretch where it failed to move by 1%, up or down, for six straight weeks. It gained 1.6%, with much of the strength earlier in the week coming on rising hopes that Washington can avoid a debt default. Democrats and Republicans are facing down a June 1 deadline, which is when the US government could run out of cash to pay its bills, unless Congress allows it to borrow more. A default on its debt would likely mean a recession for the economy, which has economists and investors both widely expecting a deal to be made.
- NZD/USD: 0.6175 - 0.6375 ▲
- NZD/EUR: 0.5700 - 0.5900 ▲
- GBP/NZD: 1.9750 - 1.9950 ▼
- NZD/AUD: 1.0500 - 1.0700 ▲
- NZD/CAD: 0.8350 - 0.8550 ▲