Home Daily Commentaries New Zealand dollar continues to trade above US$0.60

New Zealand dollar continues to trade above US$0.60

Daily Currency Update

The New Zealand dollar remains relatively unchanged again this morning when valued against the Greenback, currently trading at US$0.6032 at the time of writing. The NZD/USD pair traded in positive territory near US$0.6075 during the early Asian session on Monday. The pair edges higher amid the softer US dollar (USD) broadly and the announcement of China rate cuts. On Monday, the People's Bank of China (PBoC) decided to cut the one-year Loan Prime Rate (LPR) by 25-basis points (bps) from 3.35% to 3.10% and cut the five-year LPR from 3.85% to 3.60%.

China’s latest move to revive growth and fight off deflation is likely to support the New Zealand dollar (NZD) as China is a major trading partner for New Zealand. On the local front, credit card spending in December topped the previous months in 2016, exceeding the billings of the previous two years. Domestic billings reached $3.5 billion during the Christmas month, up from $3.4 billion in 2015 and $3.3b in 2014. Overseas credit cards racked up a neat $589 million in New Zealand, reflecting the surge in tourism. Conversely, Kiwis overseas spent $408m in December, up from $373m in the previous year. Total credit card billings in New Zealand for December reached $4.1b, an 8.5 per cent increase on the previous year.

Looking ahead today, Statistics New Zealand will release the latest Trade Balance data for the month. Finally, on Thursday RBNZ Governor Adrian Orr is due to speak about monetary policy at the Peterson Institute, in Washington DC.

Key Movers

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is slightly higher at the start of the week, supported by safe-haven flows amid geopolitical tensions. Some Federal Reserve (Fed) members are scheduled to speak later on Monday and their comments will be closely watched for any clues on the Fed's monetary policy stance. Bets for a less aggressive Fed policy easing might lift the Greenback in the short term.

The chance of an additional quarter-point rate cut in November stands at more than 90%. Financial markets have priced in two 25-basis points (bps) interest rate cuts before the end of 2024 and further rate cuts next year, likely bringing the policy rate to a 3.25%-3.5% range by September 2025, per Reuters. The Dow Jones Industrial Average (DJIA) backslid on Monday, tumbling 330 points and shedding eight-tenths of one per cent as equity markets ease back from recent record highs.

The Dow bore most of the bearish burden to kick off the new trading week, with losses consolidated largely within the major equity index. Economic activity figures in this week’s S&P data on Thursday might shake the USD, as well as those in the Fed’s Beige Book report on Wednesday.

Expected Ranges

  • NZD/USD: 0.5900 - 0.6100 ▼
  • NZD/EUR: 0.5450 - 0.5650 ▼
  • GBP/NZD: 2.1400 - 2.1600 ▲
  • NZD/AUD: 1.0950 - 1.1150 ▼
  • NZD/CAD: 0.8250 - 0.8450 ▲

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.