Home Daily Commentaries New Zealand opens slightly weaker against the greenback

New Zealand opens slightly weaker against the greenback

Daily Currency Update

The New Zealand dollar opened weaker against the greenback as the sentiment-linked Kiwi dollar was among the worst-performance G10 currencies. The New Zealand dollar was the biggest loser in January 2022, falling against all its peers. Risk aversion picked up the pace on Friday on Wall Street after the closing bell. Last week Prime Minister Jacinta Ardern announced the long-awaited schedule for the reopening of their border. It will be a multi-stage process, starting with vaccinated New Zealanders from Australia later this month and then from elsewhere, including critical and skilled workers, from mid-March. International tourism is not envisaged until October.

Looking ahead this week in New Zealand will feature Business NZ PMI, Electronic Retail Card Spending, and Business Inflation Expectations for Q1. From a technical perspective, the NZD/USD pair is currently trading at 0.6596. We continue to expect support to hold on to moves approaching 0. 0.6529. A breach of these levels would open the door to further Australian dollar weakness.

Key Movers

On Friday we saw the release of an upbeat US employment report. The US managed to add 467K new jobs in January, more than the 150K expected. The unemployment rate was up from 3.9% to 4%, but the participation rate increased to 62.2% from 61.9% in December. The upbeat readings sent investors back as the greenback traded higher, as they were reminded of how the Federal Reserve has by far the most aggressive tightening program in town at the moment. The US employment report showed that average hourly earnings rose by 5.7%, exerting further pressure on the Fed, as higher wages equals elevated inflation. Furthermore, the unemployment rate touched 4.0%, a tenth more elevated than the 3.9% estimated. Looking ahead this week the US will publish the final estimate of the January Consumer Price Index and the preliminary estimate of the February Michigan Consumer Sentiment Index next week.

Expected Ranges

  • NZD/USD: 0.6500 - 0.6700 ▼
  • NZD/EUR: 0.5650 - 0.5850 ▼
  • GBP/NZD: 2.0350 - 2.0550 ▲
  • NZD/AUD: 1.0550 - 1.0750 ▼
  • NZD/CAD: 0.8350 - 0.8550 ▲