Home Daily Commentaries New Zealand dollar trades on Friday at a fresh monthly high

New Zealand dollar trades on Friday at a fresh monthly high

Daily Currency Update

The New Zealand dollar opens slightly stronger this morning when valued against the greenback rebounding on improved market sentiment.  The Kiwi dollar ended the week above 0.69 U.S. cents, up 0.4% (1.5% on the week) for the first time since November, amidst broader strength in commodity currencies.  Last week the Bank of Japan kept its policy settings unchanged, as expected, with Kuroda batting away suggestions it might consider tightening policy.  NZD/JPY ended the week with its highest close since 2017, at around 82.30.

Looking ahead and today in New Zealand and we will see the release of the Trade Balance for the month.  A poor balance of trade number on Monday will further narrow its monetary box canyon and be a potential headwind for the currency and local equities. On Tuesday we will see the release of Westpac Consumer Sentiment which is a leading indicator of consumer spending, which accounts for a majority of overall economic activity. From a technical perspective, the NZD/USD pair is currently trading at 0.6843. We continue to expect support to hold on to moves approaching 0.6837 while now any upward push will likely meet resistance around 0.6914.

Key Movers

On Friday in the saw the release of US Jobless Claims. In the week ending March 12, the advance figure for seasonally adjusted initial claims was 214,000, a decrease of 15,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 227,000 to 229,000. The 4-week moving average was 223,000, a decrease of 8,750 from the previous week's revised average. The previous week's average was revised up by 500 from 231,250 to 231,750. Looking ahead this week and the economic calendar is filled with releases that include new home sales, durable goods orders, the flash PMI readings, and the final consumer sentiment readings for March.  Widespread pricing pressures will likely weigh on consumer sentiment, manufacturing and service activity. The housing market remains hot but surging mortgage rates will shortly cool that economy.

Last week the Federal Open Market Committee (FOMC) raised interest rates by 25bps for the first time since 2018 whilst signalling there could be more.  Over the weekend Federal Governor Christopher Waller put the market firmly on notice for a 50bps rate hike in the coming months, explaining it was only the uncertainty around the Ukraine war that persuaded him to vote for a 25bps hike last week.

Expected Ranges

  • NZD/USD: 0.6800 - 0.7000 ▲
  • NZD/EUR: 0.6100 - 0.6300 ▲
  • GBP/NZD: 1.8900 - 1.9100 ▲
  • NZD/AUD: 1.0550 - 1.0750 ▲
  • NZD/CAD: 0.8550 - 0.8750 ▲