Daily Currency Update
The New Zealand dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.6109 at time of writing. NZD/USD continues its losing streak for the third consecutive day on Thursday. The NZD/USD pair trades around 0.6100 during European hours, following the release of the Yearly Budget by the New Zealand Treasury. The tax package, worth NZ$14.7 billion ($13.6 billion) over four years, targets low- and middle-income households, and those with young children will benefit the most. For the first time in 14 years, the government will be changing the country’s tax threshold. This was the major theme in Finance Minister Nicola Willis’s inaugural Budget speech. Willis prioritised tax relief in her speech and said the relief would “put $3.7 billion a year back into the pockets of New Zealanders”. While many have said Willis mostly delivered what she promised, some in Northland have mixed feelings about the Budget. Those speaking on Māori issues, education, health and transport, among other topics, have cautiously welcomed it. Looking ahead today and treasury New Zealand will release the latest Annual Budget Release. This document outlines the government's budget for the year, including expected spending and income levels, borrowing levels, financial objectives, and planned investments.
Key Movers
On the data front, yesterday in the United States real Gross Domestic Product expanded at an annual rate of 1.3% in the first quarter, the US Bureau of Economic Analysis' (BEA) second estimate on Thursday. This reading followed the 1.6% growth recorded in the first estimate and came in line with the market expectation. The update to the first quarter growth metric "primarily reflected a downward revision to consumer spending," per the BEA. Personal consumption in the first quarter grew at 2%, down from a prior reading of 2.5%. The slowdown in headline GDP comes at a time when markets have been sensitive to any readings, indicating that the economy may be running too hot for the Federal Reserve's liking, as inflation has proved stickier than expected. The concern is red-hot growth would boost price increases. Core Personal Consumption Expenditures (PCE) QoQ also ticked lower to 3.6% when markets expected a hold at 3.7%. With US growth and price inflation showing further signs of cooling off, investors are stepping back into hopes for rate cuts from the Federal Reserve (Fed).
Expected Ranges
- NZD/USD: 0.6000 - 0.6200 ▼
- NZD/EUR: 0.5550 - 0.5750 ▼
- GBP/NZD: 2.0700 - 2.0900 ▲
- NZD/AUD: 1.0700 - 1.0900 ▲
- NZD/CAD: 0.8250 - 0.8450 ▼