Kiwi closes above 71 US cents despite renewed downside pressure
Monday 8 November, 2021
Daily Currency Update
NZD - New Zealand Dollar
The New Zealand dollar could not extend its rally last week, faltering at the 72 US cent handle as multiple central banks provided more dovish stances to potential interest rate hikes compared to market pricing. Opening at 0.7109 on Friday, there was little news during the domestic session as a gain of 0.19% was seen before the end of the play, finishing higher on the day at 0.7115 as equity markets continued its march to record highs in the United States. The Nasdaq saw its seventh straight positive day, a stronger than expected jobs number in the United States was the catalyst.
There is little of note on the agenda this week domestically, with expectations that media and markets will continue its discussion around the likelihood of the RBNZ hiking interest rates despite other central banks globally such as the RBA and BOE taking a more cautious approach. A further 25 basis point rise is expected and fully priced in on November 24th with a 50% chance of a 50 basis points hike to calm rapidly increasing inflationary pressures.
The New Zealand dollar opens this morning at 0.7105. We expect support levels to hold onto moves approaching the 0.7080, while any upward push will likely meet resistance at the 72 US cent handle.
Key MoversThe Great British pound was one of the biggest movers this week, shedding 1.4% on Thursday evening following the unexpected move by the Bank of England to keep interest rates on hold at 0.1%. GBP/USD steadied on Friday despite seeing an intraday low of 1.3424 before closing at 1.3494.
The US Dollar Index (DXY) which measures several currencies against the greenback finished 0.12% lower at 94.22 despite a stronger than expected job print in the United States. A year high of 94.62 for the DXY was seen preceding the result as 531,000 jobs were added to the market. While the number beat forecasts, it is unlikely to shake out a dovish Federal Reserve as our attention turns to the latest inflation print in the United States due for release on Wednesday evening. Investors are eagerly watching the escalating issue of inflation across the globe and whether the higher number will force the hands of the Federal Reserve to start shifting its interest rate hikes earlier than expected. The CME FedWatch tool is currently projecting the first hike in mid-2022.
Elsewhere the EUR/USD was 0.12% higher at 1.1567 and USD/JPY finished 0.31% lower to 1.1339. This week several FOMC members are due to speak on Tuesday morning including Federal Reserve Chairman Jerome Powell. PPI and CPI figures are both due for release this week in the United States.
- NZD/USD: 0.7080 - 0.7200 ▲
- NZD/EUR: 0.9580 - 0.9650 ▲
- GBP/NZD: 1.8800 - 1.9200 ▲
- NZD/AUD: 0.6100 - 0.6180 ▲
- NZD/CAD: 0.8820 - 0.8900 ▲