Home Daily Commentaries New Zealand dollar trades below US$0.62

New Zealand dollar trades below US$0.62

Daily Currency Update

The Kiwi dollar is weaker this morning when valued against the Greenback. NZD/USD fell to a low near 0.6120 overnight Friday before recovering to close at 0.6140. The New Zealand dollar has delivered a bumpy ride amid headwinds of negative market sentiment due to accelerating fears of global recession. The New Zealand dollar drew some support from the domestic trade balance data on Friday, which showed that exports to China increased by 18% in May. This helps ease jitters over the Chinese economy and largely overshadows the fact that New Zealand’s trade deficit widened from NZ$17.02 billion to NZ$17.12 billion. Additional details showed the monthly trade surplus narrowed from NZ$236 million to NZ$46 million in May against a deficit of NZ$350 million anticipated. Apart from this, subdued USD price action lends some support to the NZD/USD pair.

Looking at the week ahead and there are no scheduled releases today in New Zealand. On Thursday we will see the release of the ANZ Business Confidence, a leading indicator of economic health - businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment. On Friday the Reserve Bank of New Zealand (RBNZ) will release a Statement of Intent, which provides insights into the bank's strategic priorities for the next financial year.

Key Movers

On the data front, inflation in the US on Friday PMIs indicated mixed results for the US in the month of June, according to the S&P Global report. The Manufacturing PMI for June fell to a five-month low, reaching 46.3, failing to live up to the expectations of 48.3. On the positive side, the Services PMI came slightly above the expectations at 54.1 vs the 54 anticipated by markets. Moreover, the Global Composite PMI dropped to 53 vs the 54.4 expected. Looking ahead this week and all eyes will be on the release of Core Personal Consumption Expenditures (PCE) and Gross Domestic Product (GDP) data from the US, where investors will get a clearer outlook of the economic activity and inflation in order to start modeling their expectations towards the next Fed meeting in July.

Global equity markets fell on Friday, contributing to the largest weekly pullback since the US regional banking crisis began in March amid concerns about the growth outlook. The S&P lost 0.8%, resulting in a weekly pullback of nearly 2%. Dow -0.7%, S&P -0.8%, and Nasdaq -1%. The yield on the US 10-year note slid 6 basis points to 3.73 per cent at 4.59pm in New York. Government bond yields tumbled across the Americas and Europe as recession worries spiked.

Expected Ranges

  • NZD/USD: 0.6035 - 0.6235 ▼
  • NZD/EUR: 0.5530 - 0.5730 ▼
  • GBP/NZD: 2.0600 - 2.0800 ▲
  • NZD/AUD: 1.0750 - 1.0950 ▼
  • NZD/CAD: 0.8000 - 0.8200 ▼