Home Daily Commentaries New Zealand dollar trades above US$0.62

New Zealand dollar trades above US$0.62

Daily Currency Update

The Kiwi dollar is slightly stronger this morning when valued against the Greenback. The NZD/USD traded stable at the 0.6210-0.6245 range at the end of the week, holding to a 170 pip weekly gain. The Kiwi dollar was broadly stable on most crosses. Last week’s GDP report showed that the New Zealand economy is steadily cooling down. That’s entirely to be expected in the wake of more than 500 basis points of cash rate increases over the last two years. New Zealand’s GDP dipped by 0.1% in the March quarter. That was in line with the average market forecast, but a little stronger than our pick of a 0.4% fall. However, downward revisions to previous quarters meant that annual growth was right in line with our forecast at 2.2%. On the technical level, immediate support is seen at 0.6218, followed by the 0.6200 psychological mark and the 200-day SMA at 0.6150. On the other hand, resistances line up at 0.6250, followed by 0.6300 (May 12 high) and the 0.6230 area.

Looking at the week ahead and New Zealand and today we will see the release of the Business NZ Services Index. On Tuesday we will see the release of the Westpac Consumer Sentiment, a survey of about 1,500 consumers which asks respondents to rate the relative level of past and future economic conditions, including personal financial situation, climate for major purchases, and overall economic situation. Finally on Thursday Statistics New Zealand will release the latest Trade Balance figures, while the Reserve Bank of New Zealand will release Credit Card Spending report.

Key Movers

On the data front in the US, The University of Michigan (UoM) reported on Friday that the Michigan Consumer Sentiment Index came in at 63.9 in June vs 60 expected and accelerated from its previous figure of 59.2. In addition, the five-year Consumer Inflation Expectation from June dropped to 3% vs the consensus of 3.1%. The data helped the US dollar find its feet after the recent decline. It's worth noting that on Wednesday, the revised dot plots from the Federal Open Market Committee (FOMC) showed that members are seeing two more 25 bps hikes this year, so the hawkish stance from the Fed gives the USD traction. US equities retreated from 2023 highs on Friday, but the S&P still added more than 2.5% over the week with global stock indices also making solid gains.

The EUR/GBP is breaking below the support area of 0.8540 and is currently trading around 0.8530, its lowest level since August 2022. The cross resumed its downward trend after a brief pause and a short-lived rebound following the European Central Bank (ECB) meeting. On Thursday, as expected, the ECB raised rates by 25 basis points. Despite the hawkish tone from President Lagarde, who mentioned that another hike in July was likely, the EUR/GBP only rose modestly approaching 0.8600 and then weakened again. According to revised macroeconomic projections, headline inflation is expected to average 5.4% in 2023, 3.0% in 2024, and 2.2% in 2025.

Expected Ranges

  • NZD/USD: 0.6100 - 0.6300 ▲
  • NZD/EUR: 0.5600 - 0.5800 ▲
  • GBP/NZD: 2.0450 - 2.0650 ▼
  • NZD/AUD: 1.0900 - 1.1100 ▼
  • NZD/CAD: 0.8100 - 0.8300 ▲