Home Daily Commentaries New Zealand dollar trades below 61 US cents

New Zealand dollar trades below 61 US cents

Daily Currency Update

The Kiwi dollar is slightly weaker this morning when valued against the Greenback. The NZD/USD pair is displaying a back-and-forth action after a soft recovery of around 0.6070 during Friday's session. The Kiwi asset is expected to extend recovery as the US Dollar Index (DXY) has shifted into the bearish trajectory amid bets favoring a pause in the rate-hike spell by the Federal Reserve (Fed). The NZD/USD pair is currently trading around the 0.6050 level at the time of writing. NZD/AUD remained under pressure into the weekly close with the pairing closing near 0.9280 marking a sharp fall from 0.9450 levels from before the RBNZ’s Monetary Policy Statement last Wednesday.
Last week the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr raised its Official Cash Rate (OCR) by 25 basis points (bps) to 5.5%. Reserve Bank of New Zealand´s Assistant Governor Karen Silk noted that Cyclone Gabrielle was less inflationary than first feared and stated that rates need to stay on hold for an extended period. She said that they must be watchful of over-tightening policy and that the RBNZ can hold now and see what develops. Looking ahead this week and on Tuesday Statistics New Zealand will release the monthly Building Consents. It's a leading gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building. On Wednesday we will see the release of the ANZ Business Confidence Survey a leading indicator of economic health. Finally, on Friday we will see the release of the quarterly Overseas Trade Index.

Key Movers

US President Joe Biden and House Republican Speaker Kevin McCarthy on Saturday reached an agreement in principle to lift the debt ceiling that would trim some US federal spending. The “agreement in principle” clinched by House Republicans and the White House late Saturday was the culmination of mad-dash negotiations over the course of the past week that regularly stretched late into the night. The agreement which would raise the debt ceiling for two years, freeze spending on domestic programs. US Treasury Secretary Janet Yellen spoke on Friday and extended the deadline for raising the federal debt limit, saying the government could default on its debt as early as June 5 without increasing the country's $31.4 trillion debt ceiling.
On the data front Inflation in the US, as measured by the change in Personal Consumption Expenditures (PCE) Price Index, rose to 4.4% on a yearly basis in April from 4.2% in March, the US Bureau of Economic Analysis reported on Friday. This reading came in higher than the market expectation of 3.9%. The increase in the annual Core PCE Price Index, the Federal Reserve's preferred gauge of inflation, edged higher to 4.7% from 4.6% in the same period, compared to analysts' forecast of 4.6%. On a monthly basis, Core PCE inflation and PCE inflation both rose 0.4%.

Expected Ranges

  • NZD/USD: 0.5950 - 0.6150 ▼
  • NZD/EUR: 0.5550 - 0.5750 ▼
  • GBP/NZD: 2.0300 - 2.0500 ▲
  • NZD/AUD: 1.0650 - 1.0850 ▼
  • NZD/CAD: 0.8100 - 0.8300 ▲