Daily Currency Update
The New Zealand dollar remains relatively unchanged again this morning when valued against the Greenback currently trading at US$0.6042 at the time of writing. NZD/USD recovers some of its recent losses during Tuesday's Asian session. However, the New Zealand Dollar (NZD) faces pressure as the likelihood of further rate cuts in November by the Reserve Bank of New Zealand (RBNZ) grows, with inflation easing and economic output remaining sluggish. On the data front yesterday New Zealand's monthly Trade Balance showed a deficit of $2.1 billion, with Exports increasing by $246 million (5.2%) to $5.0 billion, while Imports declined by $67 million (0.9%) to $7.1 billion. Potential for the New Zealand Dollar (NZD) to continue to decline; given the oversold conditions, it is unlikely to break clearly below US$0.6005. Looking ahead for the rest of the week and on Thursday RBNZ Governor Adrian Orr is due to speak about monetary policy at the Peterson Institute, in Washington DC. Westpac now forecasts two 50bp cuts to the OCR at the October and November RBNZ policy meetings, taking the OCR to 4.25% at the end of 2024. 2025 is expected to see just two 25bp cuts taking the OCR to the assumed terminal rate of 3.75% by mid-2025.
Key Movers
The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, sees modest gains amidst profit-taking after a sustained rally. US equities are pulling back while Treasury yields and the USD continue to strengthen. Higher Treasury yields are attracting foreign capital inflows, providing further support to the US Dollar. Gold prices extended their gains for the fifth day out of the last six and reached an all-time high (ATH) at $2,748, just shy of the psychological $2,750 mark. Geopolitical tensions and expectations that the Federal Reserve (Fed) would continue to lower borrowing costs are tailwinds for the yellow metal. Therefore, XAU/USD trades at $2,744, gaining almost 1%. Looking ahead for the rest of the week and on Thursday, US Initial Jobless Claims for the week ending October 19 are foreseen rising from 241K to 242K. October’s S&P Global Manufacturing PMI is expected to improve from 47.3 to 47.5. The Services PMI for the same period is estimated to dip from 55.2 to 55. The S&P 500 was little changed. The Nasdaq 100 rose 0.1%. The Dow Jones Industrial Average was little changed. In late hours, Texas Instruments Inc. gave a lackluster revenue forecast for the fourth quarter. Starbucks Corp.’s guidance will be suspended for 2025.
Expected Ranges
- NZD/USD: 0.5950 - 0.6150 ▲
- NZD/EUR: 0.5500 - 0.5700 ▲
- GBP/NZD: 2.1300 - 2.1500 ▼
- NZD/AUD: 1.0900 - 1.1100 ▼
- NZD/CAD: 0.8250 - 0.8450 ▲