Home Daily Commentaries New Zealand dollar continues to trade above 62 US cents

New Zealand dollar continues to trade above 62 US cents

Monday 28 November, 2022

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback. After its recent strong run, the Kiwi dollar was slightly lower on Friday, ending the week at 0.6250. It was the sixth consecutive weekly gain for the NZD (+1.6%) and some consolidation is likely in order after a 13% appreciation since mid-October. On Friday New Zealand retail sales volumes rose a seasonally adjusted 0.4 percent in the third quarter, data from Statistics New Zealand showed on Friday, putting sales 4.9 percent higher on the year. The quarterly release of Retail Sales by the Statistics New Zealand directly reflects on the country’s consumer spending. Stronger sales could drive inflation higher, leading the Reserve Bank of New Zealand (RBNZ) to hike interest rates to maintain its inflation-containment mandate. New Zealand Consumer sentiment has slumped further amid rising interest rates, high inflation, falling house prices, and prospect of a slowing economy. The ANZ-Roy Morgan consumer confidence survey shows a five point fall to 80.7, the lowest level since June. A reading below 100 signals pessimism. Looking ahead this week and on Wednesday we will see the release of New Zealand's monthly Building Consents and the ANZ Business Confidence which is a leading indicator of economic health - businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment. On Friday we will see the release of the quarterly NZ Overseas Trade Index which calculates the volume of imports that can be purchased with an equal volume of exports. Also on Friday Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr is due to participate in a panel discussion titled "A Digitalised Monetary System in the Making?" at the Bank of Thailand 80th Anniversary Conference, in Bangkok.

Key Movers

On Friday US markets were much quieter than usual on Friday, with many investors taking a long weekend for Thanksgiving. US equities were little changed on a shortened trading session. The S&P50 was flat on the day and the NASDAQ was down 0.5%. The S&P500 was up 1.5% on the week, now trading near its highest level in 2½ months. Market sentiment has been notably less pessimistic since the recent lower-than-expected US Consumer Price Index (CPI) print. Looking ahead this week in the US and on Wednesday Federal Reserve Chair Jerome Powell is due to speak about the economic outlook, inflation, and the labor market at the Brooking Institution, in Washington DC. On Thursday we will see the release of US ISM Manufacturing PMI (with the market looking for the first sub-50 reading for the cycle). Above 50.0 indicates industry expansion, below indicates contraction. Finally, on Friday we will see the release of the US Non-Farm Employment Change (with the market looking for 200k job growth and an unchanged unemployment rate of 3.7%).

Expected Ranges

  • NZD/USD: 0.6100 - 0.6300 ▼
  • NZD/EUR: 0.5850 - 0.6050 ▼
  • GBP/NZD: 1.9250 - 1.9450 ▲
  • NZD/AUD: 1.0650 - 1.0850 ▲
  • NZD/CAD: 0.8200 - 0.8400 ▲