New Zealand falls ahead of US data
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Daily Currency Update
The New Zealand dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.5901 at time of writing. The NZD/USD pair has trimmed its daily gains and is depreciating, trading near 0.5920 during the early European session on Thursday. The New Zealand dollar (NZD) faces pressure as expectations mount for further monetary easing by the Reserve Bank of New Zealand (RBNZ). Markets are widely anticipating a 25-basis point rate cut at the upcoming RBNZ meeting, with rates projected to reach a low of 2.75% by October. The New Zealand dollar can find support in a détente in the China-U.S. trade conflict. Hopes for détente were given a massive boost today after China indicated scope for direct talks with the U.S., something it has so far been coy about doing. The New Zealand dollar is sensitive to global sentiment and its economy relies heavily on the export of ’soft’ raw materials to China, such as milk, wood, fruit and lamb. A global trade war would significantly slow Chinese economic activity and demand for Kiwi goods, which can be highly elastic to consumer sentiment.Key Movers
The US Dollar Index (DXY), which measures the value of the US dollar (USD) against a basket of currencies, is rising above the 100.00 level, as markets absorb softer-than-expected labor and manufacturing data. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index fell to 48.7 in April from 49.0, indicating continued contraction. The figure still came in slightly better than the market expectation of 48.0. Initial unemployment claims posted an unexpected increase last week in a potentially troubling sign for the wobbling U.S. economy. First-time filings for unemployment insurance totalled a seasonally adjusted 241,000 for the week ended April 26, up 18,000 from the prior period and higher than the Dow Jones estimate for 225,000, the Labor Department reported on Thursday. This was the highest total since Feb. 22. Continuing claims, which run a week behind and provide a broader view of layoff trends, rose to 1.92 million, up 83,000 to the highest level since Nov. 13, 2021. The Labor Department on Friday will release its non-farm payrolls total for April, with economists expecting an increase of 133,000. The Thursday release will not factor into that number, as it is beyond the survey week used for the report.Expected Ranges
- NZD/USD: 0.5800 - 0.6000 ▼
- NZD/EUR: 0.5100 - 0.5300 ▼
- GBP/NZD: 2.2400 - 2.2600 ▲
- NZD/AUD: 1.0700 - 1.0900 ▼
- NZD/CAD: 0.8100 - 0.8300 ▼