Daily Currency Update
The New Zealand dollar is weaker this morning when valued against the Greenback, currently trading at US$0.6003 at time of writing. The NZDUSD pair fell back to near US$0.6020 after a short-lived recovery in Wednesday’s European session. The pair faces pressure as rising US Treasury yields have further strengthened the US dollar. 10-year US bond yields rise to an almost 12-week high near 4.22% amid uncertainty over the United States presidential elections and Middle East risks staying afloat. Meanwhile, the New Zealand dollar remains fragile due to dismal market sentiment. A sharp decline in S&P 500 futures in European trading hours suggests weakness in investors’ risk appetite. Yesterday, the Reserve Bank of New Zealand (RBNZ) Governor, Adrian Orr, flagged the potential that the New Zealand central bank may be more “circumspect” when it comes to further rate cuts after the RBNZ kicked off a rate cutting cycle this year. Governor Orr explained that low and stable inflation is in sight, but interest rates will need to be managed to dampen the last pockets of high price pressures. Governor Orr said risks remained and there was still much uncertainty. But as inflation pressures and expectations stabilised, interest rates would continue to be lowered, which would lift the economy. The consumer price index hit a 3.5 year low earlier this month.
Key Movers
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs to near US$104.40. The outlook of the US dollar has strengthened further as the International Monetary Find (IMF) has upwardly revised US growth projections for the current and the next year. The IMF expects the US economy to end the 2024 and 2025 year with a Gross Domestic Product (GDP) growth of 2.8% and 2.2%, respectively. Gold price plunges from an all-time high of US$2,758 on Wednesday as US Treasury yields climbed, while the Greenback refreshes a two-month high, according to the DXY. At the time of writing, the XAUUSD trades at $2,716, down more than 1%. U.S. stocks fell Wednesday as Treasury yields continued to climb on concerns of a more shallow outlook for the US Federal Reserve's rate cut cycle. The Dow Jones Industrial Average fell 235 points, or 0.6%, the S&P 500 index fell 17 points, or 0.3%, and the NASDAQ Composite fell 88 points, or 0.5%. The economic data calendar is relatively quiet Wednesday, with existing home sales for September the main release. Focus is turning towards the U.S. presidential election, with investors also increasingly positioning ahead of the Nov. 5 polling day.
Expected Ranges
- NZD/USD: 0.5900 - 0.6100 ▼
- NZD/EUR: 0.5450 - 0.5650 ▼
- GBP/NZD: 2.1350 - 2.1550 ▲
- NZD/AUD: 1.0900 - 1.1100 ▲
- NZD/CAD: 0.8200 - 0.8400 ▼