Home Daily Commentaries New Zealand dollar holds above US$0.62 

New Zealand dollar holds above US$0.62 

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the Greenback, currently trading at US$0.6257 at the time of writing. The NZD/USD pair edges higher as investors digest monetary policy decisions from the US Federal Reserve’s (Fed) sharp rate cut last week. While the latest Gross Domestic Product (GDP) figures show the New Zealand economy has contracted again, falling 0.2% in the second quarter (Q2).

Yesterday on the local front, overseas merchandise trade statistics provided information on imports and exports of merchandise goods between New Zealand and other countries. Goods exports fell by $6.1 million (0.1 per cent), to $5 billion, while goods imports fell by $70 million (1.0 per cent), to $7.2 billion. As a result, the monthly trade balance was a deficit of $2.2 billion.

The value of meat and edible offal fell $119 million (19 per cent) to $497 million. Sheep meat fell $64 million (27 per cent) to $170 million, and beef fell $51 million (15 per cent), to $286 million. Milk powder, butter and cheese fell $79 million (8.1 per cent), to $885 billion. Overall, goods imports fell by $70 million (1.0 per cent) to $7.2 billion in August 2024, compared to August 2023.

There are no scheduled releases today in New Zealand.

Key Movers

Last week the Federal Reserve (Fed) cut its benchmark interest rate by 50 basis points (bps), marking the first reduction in four years. The half-point move signals that the Fed is acting aggressively to keep the US economy from stalling. The US economy is showing signs of deceleration, but there are also signs of the economic activity holding resilient. The Fed has stated that the pace of the easing cycle will depend on the incoming data.

U.S. business activity was steady in September, however average prices charged for goods and services rose at the fastest pace in six months, potentially hinting at a pick-up in inflation in the coming months. S&P Global said on Monday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, was little changed at 54.4 this month, compared to a final reading of 54.6 in August. A reading above 50 indicates expansion in the private sector.

September's reading aligns with reports this month, including retail sales, that have suggested the economy maintained its solid growth momentum in the third quarter. The survey's measure of prices paid by businesses for inputs increased to a one-year high of 59.1, from 57.8 last month. Its gauge of prices charged rose to 54.7 from 52.9 in August. Rising costs, mostly in the services sector linked to wage raises, were attributed to the increase.

At face value, this would suggest that price pressures were building up again, but there is growing evidence that inflation is cooling. The survey's flash manufacturing PMI dropped to a 15-month low of 47.0 from 47.9 in August. Economists polled by Reuters had forecast the index for the sector, which accounts for 10.3% of the economy, rising to 48.5. Its flash services PMI dipped to 55.4 from 55.7 in August, broadly in line with economists' expectations for a reading of 55.2.

Expected Ranges

  • NZD/USD: 0.6150 - 0.6350 ▲
  • NZD/EUR: 0.5550 - 0.5750 ▲
  • GBP/NZD: 2.1150 - 2.1350 ▼
  • NZD/AUD: 1.0800 - 1.1000 ▼
  • NZD/CAD: 0.8350 - 0.8550 ▼

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.