Home Daily Commentaries New Zealand dollar opens slightly above US70¢

New Zealand dollar opens slightly above US70¢

Daily Currency Update

NZD - New Zealand Dollar

The New Zealand dollar continues to lose ground against the greenback. The New Zealand dollar remains under pressure in what was a rough week for the currency since the initial response to a stronger-than-expected rise in the US consumer price index (CPI). The Kiwi dollar has fallen 1.45% last week against the greenback, down 0.13% during Friday’s session, and slipping below the 0.70 line, a psychologically significant level. New Zealand has recently been experiencing surging inflation as the economy emerges from the Covid pandemic. In October, CPI for the third quarter jumped 4.9% y/y, up sharply from 3.3% in Q2. The RBNZ has been cautiously optimistic about the country’s recovery from Covid 19, although higher global inflation remains a concern.

Looking ahead this week the RBNZ’s inflation expectation data will be released on Nov 16. Market participants anticipate the inflation expectations at 2.27%. Any print higher than the expected value may trigger some support for the Kiwi. This is an important indicator to gauge the economic recovery after Covid and may signal a rate hike. From a technical perspective, the NZD/USD pair is currently trading at 0.7036. We continue to expect support to hold on moves approaching 0.6970 while now any upward push will likely meet resistance around 0.7085.

Key Movers

Last week in the United States the greenback soared after the US Labor Department reported a 6.2% increase in the cost of living in the world’s biggest economy over the past year. The reading marks an acceleration from the 0.4% gain seen in September and the largest one-month jump since 2008. Year-over-year, inflation at 6.2% is the highest in 30 years. The number spurred speculation the US Federal Reserve may have no other choice but to lift interest rates next year. Speculation of a tighter monetary policy in the US weighed on Wall Street, which in turn, dragged AUD/USD further lower. Looking ahead this week the US will release their retail sales for the month of October, foreseen to be stable at 0.7%.

Expected Ranges

  • NZD/USD: 0.6900 - 0.7100 ▼
  • NZD/EUR: 0.6000 - 0.6200 ▼
  • GBP/NZD: 1.8900 - 1.9100 ▲
  • NZD/AUD: 1.0300 - 1.0500 ▲
  • NZD/CAD: 0.8700 - 0.8900 ▼