New Zealand dollar trades back above 59 US cents
Daily Currency Update
The Kiwi dollar is slightly stronger this morning when valued against the Greenback. The Kiwi dollar extended its gains for the third trading session, trading higher around 0.5930 during the Asian session on Monday as a result of the retreat in the US dollar. This NZD/USD pair is experiencing upward support due to the reduced likelihood of the US Federal Reserve (Fed) maintaining unchanged interest rates in the upcoming September meeting.On the local data front New Zealand’s Manufacturing Sales for the second quarter improved to 2.9% versus a 2.1% drop in the previous reading, Statistics New Zealand reported last week. Additionally, the ANZ Commodity Price for August fell to 2.9% from a 2.6% drop in July. The nation’s Terms of Trade Index improved to 0.4% in the second quarter, compared to a decline of 1.5% in the previous reading and an expected drop of 1.3%. The NZD/USD pair is currently trading at 0.5918 at the time of writing.
Looking ahead today, Statistics New Zealand will release 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. On Wednesday we will see the release of the Food Price Index (FPI) for the month. Although food is among the most volatile consumer price components, this indicator garners some attention because New Zealand's major inflation data is released on a quarterly basis.
Finally, on Friday we will see the release of the BusinessNZ Manufacturing Index which is 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
Market investors will shift their attention to the US Consumer Price Index (CPI) for August on Wednesday. The monthly figure is expected to rise by 0.5%, while the core monthly figure is expected to remain at 0.2%. On Thursday, Australia’s employment data and US Retail Sales will be in the spotlight. The encouraging US economic data last week lends support to the higher for longer interest rate narrative in the US.The markets have priced in a 93% chance of a rate hold at the September meeting and a 43.5% chance of a rate hike at the November meeting, according to the market forecast. These events could trigger the volatility and give a clear direction to the AUD/USD pair.
In the UK overnight the Pound sterling (GBP) posted modest gains versus the US dollar (USD) late on Monday’s North American session after seesawing in an 80-pip range, though it stays afloat above the 1.2500 figure. The GBP/USD is trading at 1.2510, gaining 0.37%. the Bank of England (BoE) MPC member Catherine Mann stressed that it’s too soon for the BoE to end its tightening cycle and added that she “would rather err on the side of over-tightening” than the opposite.
Although it should be positive for the GBP/USD exchange rate, the August UK employment report on Tuesday could shift the pair’s direction. The GBP/USD pair is currently trading at 1.2505 at the time of writing.
Expected Ranges
- NZD/USD: 0.5820 - 0.6020 ▲
- NZD/EUR: 0.5400 - 0.5600 ▲
- GBP/NZD: 2.1015 - 2.1215 ▼
- NZD/AUD: 1.0750 - 1.0950 ▼
- NZD/CAD: 0.7930 - 0.8130 ▲