Daily Currency Update
The Kiwi dollar is slightly stronger this morning when valued against the Greenback, trading above 61 US cents. The New Zealand dollar rallied behind a weaker US dollar and the Reserve Bank of New Zealand (RBNZ) interest rate decision earlier yesterday morning. Although the central bank kept rates on hold a rather hawkish and authoritative tone was set by the RBNZ Governor Orr. The RBNZ held its official cash rate (OCR) at 5.50% for a fourth straight month after having flagged an indefinite pause in its rate hike cycle earlier this year. The bank had raised the OCR by a cumulative 525 basis points between August 2021 and May 2023. “Ongoing excess demand and inflationary pressures are of concern, given the elevated level of core inflation. If inflationary pressures were to be stronger than anticipated, the OCR would likely need to increase further,” RBNZ Governor Adrian Orr said in a statement. The bank’s rate hikes over the past two years were aimed chiefly at bringing consumer price index (CPI) inflation within its 1% to 3% target range. But while the rate hikes did pull inflation down substantially, CPI inflation still remained well above the RBNZ’s target range, at 5.6% in the third quarter.
Key Movers
The US economy grew at an even faster pace in the third quarter than originally estimated, reflecting upward revisions to business investment and government spending. Gross domestic product rose at an upwardly revised 5.2 per cent annualised pace in the third quarter, the fastest in nearly two years. Consumer spending advanced at a less-robust 3.6 per cent rate, according to the government’s second estimate of the figures issued Wednesday. The government’s other main gauge of economic activity - gross domestic income - rose a more moderate 1.5 per cent. GDI is a measure of the income generated and costs incurred from producing goods and services. The average of the two growth measures was 3.3 per cent, more than double the average pace of the first half of the year. Ahead in the calendar, the US calendar will feature the Fed’s preferred gauge for inflation, the Core Personal Consumption Expenditures (PCE) price index, along with employment data on Thursday.
Expected Ranges
- NZD/USD: 0.6050 - 0.6250 ▲
- NZD/EUR: 0.5500 - 0.5700 ▲
- GBP/NZD: 2.0550 - 2.0750 ▼
- NZD/AUD: 1.0650 - 1.0850 ▲
- NZD/CAD: 0.8250 - 0.8450 ▲