Home Daily Commentaries New Zealand dollar trades above 63 US cents

New Zealand dollar trades above 63 US cents

Monday 16 January, 2023

Daily Currency Update

The Kiwi dollar is stronger this morning when valued against the Greenback trading at 0.6365 at the time of writing. The Kiwi dollar closed the week a touch soft and remains on the backside of the daily trend which leaves the outlook somewhat bearish for the week ahead, although there are prospects of a test of the high. NZD/USD pair was losing some 0.15% by the close on Friday falling from a high of 0.6415 to a low of 0.6335. Failure at 0.6400 exposed the NZD/USD to further selling pressure, with bears eyeing a break below the 20-day EMA ahead of testing the 0.6300 mark. On the flip side, if the NZD/USD reclaims 0.6400, that could set the pair poised to test December 2022 high at 0.6513. Looking to the week ahead and on Monday the World Economic Forum in Davos, Switzerland, kicks off. It’s an annual meeting where a global elite of business leaders, politicians, and economists make bold predictions and try to set the agenda for the year ahead. On Tuesday in New Zealand, we will see the release of the New Zealand Institute of Economic Research (NZIER) a survey of about 4,300 businesses that asks respondents to rate the relative 6-month economic outlook. On Thursday Statistics New Zealand will release the Food Price Index (FPI). Although food is among the most volatile consumer price components, this indicator garners some attention because New Zealand's major inflation data is released quarterly. Finally on Friday BusinessNZ will release the Manufacturing Index a survey of manufacturers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

Key Movers

The Pound Sterling is slightly weaker when valued against the Greenback following Friday’s release of the University of Michigan (UoM) Consumer Sentiment for January in the US, which exceeded estimates, while the poll showed that inflation expectations for one-year were downward revised. At the time of writing, the GBP/USD is trading at 1.2196 after hitting a daily low of 1.2150. On the UK data front the Gross Domestic Product (GDP) unexpectedly grew by 0.1% in November as consumers headed to the shops in the run-up to Christmas and pubs and bars enjoyed a boost from the men’s World Cup. Raising the government’s chances of avoiding a long recession, City economists said hard-pressed consumers had proved more resilient than forecast despite the cost of living crisis. However, business groups warned that the economy was likely to suffer over the coming months as higher mortgage rates and the withdrawal of state support for energy bills begin to hit disposable incomes further. Cost of living pressures are likely to become more acute this year as tax rises and the withdrawal of government subsidies take effect. The Bank of England has warned that the UK is probably set for a long recession, as defined by two consecutive quarters of contraction. The economy shrank by 0.3% in the third quarter between July and September, and figures for the October to December period will be published next month, confirming whether or not the economy entered recession at that point. Looking ahead to next week, the UK economic docket will feature labor market data, the Consumer Price Index, and Retail Sales.

Expected Ranges

  • NZD/USD: 0.6250 - 0.6450 ▲
  • NZD/EUR: 0.5800 - 0.6000 ▲
  • GBP/NZD: 1.8950 - 1.9150 ▼
  • NZD/AUD: 1.0800 - 1.1000 ▼
  • NZD/CAD: 0.8450 - 0.8650 ▲