Home Daily Commentaries New Zealand dollar unable to hold on to US$0.61

New Zealand dollar unable to hold on to US$0.61

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.6042 at time of writing. NZD/USD has broken out of the bottom of a long-term range yesterday reaching a daily high of 0.6107. On the data front yesterday, Stats New Zealand reported that the economy was in a technical recession in the second half of 2023. The Q4 Gross Domestic Product (GDP) for 2023 surprisingly contracted by 0.1%, while investors projected the economy to have grown at a similar pace. In the third quarter of 2023, the NZ economy also contracted by 0.3%. A weak NZ economic outlook could force the Reserve Bank of New Zealand (RBNZ) to consider early rate cuts. Looking ahead today and we will see the release of the monthly Trade Balance figures. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.

Key Movers

In the US, overnight we saw the release of US PMI data for March, Initial Jobless Claims and the Philadelphia Fed Manufacturing Index, which all supported the USD. Business activity in the US private sector continued to expand at a healthy pace in early March, with the S&P Global Composite PMI coming in at 52.2. This reading came in slightly below the February's 52.5. S&P Global Manufacturing PMI improved to 52.5 from 52.2 in the same period, while S&P Global Services PMI edged lower to 51.7 from 52.3. The latest Philadelphia Fed manufacturing index remained in positive territory for a second straight month, indicating continued expansion. In March, the index inched down to 3.2 from 5.2 in February, coming in above the forecast of -2.6. In the latest report the index remained in positive territory for a second straight month. This is only the fourth positive reading for the index in the past 22 months. In other words, the index has had 18 negative readings in the past 22 months, which more closely resembles those periods during recessions. While the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, sales of previously owned homes increased by the most in a year in February, signs the economy remained on solid footing in the first quarter. Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 210,000 for the week ending March 16, the Labor Department said. Economists polled by Reuters had forecast 215,000 claims in the latest week. Claims have been mostly bouncing around a 200,000-213,000 range since February. Despite a flurry of high-profile layoffs at the start of the year, employers have largely been hoarding labour after struggling to find workers during and after the COVID-19 pandemic.

Expected Ranges

  • NZD/USD: 0.5940 - 0.6140 ▼
  • NZD/EUR: 0.5460 - 0.5640 ▼
  • GBP/NZD: 2.0800 - 2.1000 ▲
  • NZD/AUD: 1.0750 - 1.0950 ▼
  • NZD/CAD: 0.8070 - 0.8270 ▼

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.