New Zealand dollar holds above 59 US cents
Daily Currency Update
The Kiwi dollar is slightly weaker this morning when valued against the Greenback. The NZDUSD pair struggles to capitalize on the overnight late rebound from the 59 US cent level. The Kiwi dollar is currently trading around 0.5910 and seems vulnerable to extending this week's slide from the 60 US cent psychological mark, the highest level since October 12, as seen on Monday. The market mood has soured on the back of a vaguely downbeat outlook for the global economy. Since New Zealand is a major exporter of commodities, a slowdown in global growth would not help its currency.On the data front, New Zealand’s inflation rate has been slowly dropping. Inflation fell to 5.6% in the third quarter, down from 6.0% in Q4. The downward trend is certainly encouraging for the Reserve Bank of New Zealand (RBNZ) but policymakers are also concerned about inflation expectations and not just the latest inflation numbers. The fourth-quarter release was positive, as inflation expectations fell to 2.76%, down from 2.83% in Q3 and its lowest level in two years. As we saw with inflation data, the direction is downward, but slowly. The RBNZ held rates for a third straight time at the October meeting, leaving the cash rate at 5.50%. The central bank meets next on November 29th and is expected to pause again. The RBNZ is confident that inflation will fall more quickly, projecting an inflation rate of 2.7% by Q3 of 2024.
Key Movers
The pound sterling is slightly weaker this morning when valued against the Greenback, extending its losses to three consecutive days and falls to a weekly low of 1.2241 as market sentiment shifted sour, as portrayed by Wall Street posting losses. At the time of writing, the major is trading at 1.2287, down 0.10%. Bank of England (BoE) governor Andrew Bailey pushed back against market bets on interest rate reductions, saying that officials need to carry on fighting inflation for now. Bailey reiterated that monetary policy will need to be restrictive for an extended period in comments that appeared to be more cautious about the possibility of lower rates than those made by BOE’s chief economist Huw Pill earlier in the week. Interest rate futures have fully priced in a quarter of a percentage points BoE rate cut for August 2024, with an additional one to November 2024. In the meantime, GBPUSD traders brace themselves for the release of third-quarter Gross Domestic Product (GDP) data, which is expected to show a contraction of 0.1% QoQ, on Friday. On the Eurozone (EU) front, inflation in Germany remains stickier at 3.8% YoY in October, unchanged compared to September’s data. EU Retail Sales shrank -0.3% MoM in September and 2.9% over the last twelve months.Expected Ranges
- NZD/USD: 0.5800 - 0.6000 ▼
- NZD/EUR: 0.5400 - 0.5600 ▼
- GBP/NZD: 2.0650 - 2.0850 ▲
- NZD/AUD: 1.0700 - 1.0900 ▼
- NZD/CAD: 0.8050 - 0.8250 ▼