NZD edges higher thanks to weaker US data sets
Wednesday 24 August, 2022
Daily Currency UpdateThe New Zealand dollar rallied through trade on Tuesday, punching back above 0.62 US cents following a string of weaker US macroeconomic data sets. With little of note to drive direction through the domestic session, the NZD tracked sideways before shooting through 0.62 and touching intraday highs at 0.6245. US Services, Manufacturing and housing data all turned lower through July, elevating recessionary fears and prompting calls for the Fed to reassess expectations of economic resilience. The NZD has moved off intraday highs yet continues to trade above 0.62 and currently buys 0.6210 US cents. With no headline data to drive direction through the local session, our attentions remain with US economic performance and the broader risk narrative, as the market enters a holding pattern ahead of the weekend’s Jackson hole symposium on Monetary Policy.
Key MoversThe US dollar retreated through trade on Tuesday giving up some of last weeks advance, amid a downturn in key macroeconomic indicators. US PMI’s showed further falls across both the services and manufacturing sectors, with manufacturing activity contracting for the second consecutive month and touching its weakest level in over two years. The downturn in manufacturing activity was compounded by another weak regional manufacturing update, with the Richmond Fed Manufacturing index down 8 points in July. A downturn in new home sales and a broader property market contraction added further stress to the USD. The dollar index fell 0.4% on the day, only finding support late in the overnight session.
In other news, the euro failed to capitalise on the dollars downturn, holding below parity, as Euro Area PMI data painted a bleak picture. A contraction in activity led by Germany and France will likely worsen through Q3 and Q4, as rising inflation and spiraling energy prices crimp future upside. Having touched highs at 1.000, the euro currently buys 0.9960 US cents.
Our attentions turn now to US durable goods orders, pending home sales and more commentary from Fed officials.
- NZD/USD: 0.6130 - 0.6260 ▲
- NZD/EUR: 0.6180 - 0.6250 ▲
- GBP/NZD: 1.8980 - 1.9120 ▲
- NZD/AUD: 0.8940 - 0.9020 ▼
- NZD/CAD: 0.8010 - 0.8120 ▼