Home Daily Commentaries New Zealand dollar trading just below US$0.60  

New Zealand dollar trading just below US$0.60  

Daily Currency Update

The New Zealand dollar is stronger this morning when valued against the Greenback, currently trading at US$0.5972 at the time of writing. The New Zealand dollar trimmed some losses on Wednesday, favoured by a somewhat lower US dollar, with investors growing increasingly cautious ahead of US GDP and ADP employment figures. The technical picture remains bearish which suggests the possibility of a deeper correction. Immediate resistance is at US$0.6000 ahead of US$0.6060. Supports are US$0.5950 and US$0.5910.

On the local front today, all eyes will be on the ANZ Business Confidence which is 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, Statistics New Zealand will release the latest monthly building consents.

Key Movers

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, lost ground on Wednesday following the release of mixed economic data. September’s ADP Employment Change report exceeded market expectations in October, but a downward revision in third quarter GDP growth made the USD tumble. Private sector employment in the US rose 233,000 in October and annual pay was up 4.6%, the Automatic Data Processing (ADP) reported on Wednesday. This reading followed the 159,000 increase (revised from 143,000) recorded in September and surpassed the market expectation of 115,000 by a wide margin.

The US economy grew at an annualised rate of 2.8 per cent in the third quarter, in the latest sign, American consumers remain resilient ahead of the US presidential election. The data on Wednesday from the Bureau of Economic Analysis showed GDP growth fell slightly short of economists’ estimates for a 3 per cent expansion and was just shy of the 3 per cent rate registered the previous quarter. The GDP figures come a week before the Federal Reserve is set to meet to decide on interest rates, having kicked off its easing cycle last month with a larger-than-usual half-point cut.

Wednesday’s report showed the continued streak of GDP growth, reflected the willingness of American consumers to keep opening their wallets, despite lingering inflation pressures. The CME Group’s Fed Watch tool shows a 96.3% chance of a quarter-point rate cut by the Fed next week, up from 92% on Tuesday. The chances of another 25-bps cut in December have declined below 70% from 76.6% before the data releases. Gold price (XAU/USD) is pulling back after having reached fresh record highs on Wednesday. Immediate resistance is the intraday high at $2,780, ahead of the $2,800 level. Support levels are the previous top at $2,760 and $2,730.

Expected Ranges

  • NZD/USD: 0.5900 - 0.6100 ▲
  • NZD/EUR: 0.5400 - 0.5600 ▲
  • GBP/NZD: 2.1600 - 2.1800 ▼
  • NZD/AUD: 1.0900 - 1.1100 ▼
  • NZD/CAD: 0.8200 - 0.8400 ▲

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.