Home Daily Commentaries New Zealand dollar trades below 61 US cents

New Zealand dollar trades below 61 US cents

Friday 9 September, 2022

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback. The Kiwi has traded around a 0.6030-0.6080 range and sits little changed from this time yesterday near 0.6060. The market continues to ignore the open mouth operations of Japanese government officials, who are tearing their hair out over the weak yen. The move in the kiwi largely reflects short-term stability seen in the USD itself (at elevated levels) against a backdrop of a small bounce in equities and softer oil prices. On the data front yesterday we saw the release of the quarterly Manufacturing Sales. NZ activity indicators for the manufacturing, wholesale, and services sectors were a mixed bag but allowed us to firm up our Q2 GDP estimate at 1.4% q/q for next week’s release, lower than the RBNZ’s 1.8% q/q pick with the benefit of extra data. There are no scheduled releases today in New Zealand.

Key Movers

The US dollar and shorter-dated US Treasury yields climbed on Thursday on the back of Federal Reserve Chair Jerome Powell's comments who said that the Fed was "strongly committed" to controlling inflation. Fed Chair Powell reiterated his hawkish message of Jackson Hole saying “we need to act now, forthrightly, strongly as we have been doing”. It all but seals the deal for another 75bps hike at the next FOMC meeting later this month. Market pricing for the meeting lifted again, now at 72bps, up from 64bps at the beginning of the week. On the data front yesterday the US published Initial Jobless Claims for the week ended September 2, which contracted to 222K, beating the market’s expectations. As widely anticipated, the European Central Bank hiked policy rates by 75bps, taking the deposit rate to 0.75% and delivering a hawkish outlook. The Bank’s inflation forecasts were ramped higher, with the CPI still averaging an above-target 2.3% in 2024. The central bank upwardly revised the inflation projections to an average of 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024. Policymakers also expect the economy to keep growing regardless of signs of recession, with the annual GDP seen up by 3.1% in 2022, 0.9% in 2023 and 1.9% in 2024. Additionally, the statement shows that further rate hikes are on the docket.

Expected Ranges

  • NZD/USD: 0.5950 - 0.6150 ▼
  • NZD/EUR: 0.5950 - 0.6150 ▲
  • GBP/NZD: 1.8850 - 1.9050 ▲
  • NZD/AUD: 1.1050 - 1.1250 ▼
  • NZD/CAD: 0.7850 - 0.8050 ▲