Home Daily Commentaries New Zealand dollar trades above 58 US cents

New Zealand dollar trades above 58 US cents

Wednesday 2 November, 2022

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the Greenback. The USD was on a downward trajectory on the higher risk appetite backdrop before a sharp reversal ensued, with the net change close to zero for the day. On the back of this swing, the NZD temporarily broke up through 59 US cents but has settled back down to 0.5840, still up about 0.5% from this time yesterday. Other NZD crosses are higher, with NZD/GBP near 0.51 and NZD/EUR up through 0.59, the NZD continuing its strong momentum through late October, and anticipation of strong labour market reports today (see below) providing some support. NZD/AUD has continued to push higher and sits at a 5-month high of 0.9140. On the data front today the Reserve Bank of New Zealand (RBNZ) will release its Financial Stability Report which provides insights into the bank's view of inflation, growth, and other economic conditions that will affect interest rates in the future. Statistics New Zealand will also hand down the quarterly Unemployment Rate change which is expected to go down from 3.3% to 3.2%. Looking ahead tomorrow and we will see the release of the Australia and New Zealand Banking Group (ANZ) will release the Commodity Price Index which looks at the average price of the nation's main commodity exports are sampled on the global market and then compared to the previous sampling.

Key Movers

Overnight the market sentiment remains downbeat, as shown by US equities trading with losses. The ISM Manufacturing report for October was better than forecasts at 50.2 vs. 50 estimated, while a subcomponent that measures prices fell to more than a two-year low. Meanwhile, an earlier report was a prelude for ISM data, with S&P Global PMI Manufacturing Index for the same period slowed. Still, it was above estimates of 49.9, at 50.4, but below the September figure. Also, the US Labor Department revealed September’s stronger than expected US JOLTS data, which unexpectedly rose above estimates of 10M to 10.717M, topping August’s 10.28M. All eyes will now be on the Federal Open Market Committee (FOMC) meeting. Market expectations are firmly behind a fourth consecutive 75bp interest rate hike from the Federal Reserve. The key story is whether the Fed opens the door to a slower pace thereafter or if the hawks’ focus on core inflation momentum signals a fifth 75bp move in December.

Expected Ranges

  • NZD/USD: 0.5750 - 0.5950 ▲
  • NZD/EUR: 0.5800 - 0.6000 ▲
  • GBP/NZD: 1.9550 - 1.9750 ▼
  • NZD/AUD: 1.0850 - 1.1050 ▲
  • NZD/CAD: 0.7850 - 0.8050 ▼