New Zealand dollar holds above 63 US cents
Thursday 11 May, 2023
Daily Currency UpdateThe Kiwi dollar is stronger this morning when valued against the Greenback. The Kiwi dollar reflected the broader Greenback moves, reaching an overnight high of US$0.6380, before trimming gains to opening this morning around US$0.6365 at the time of writing. The Kiwi dollar draws additional support from expectations for further rate hikes by the Reserve Bank of New Zealand (RBNZ). This in turn suggests that the path of least resistance for the NZDUSD pair is to the upside. The NZDAUD continues to edge higher testing above AU$0.9400 overnight and is currently just under that level.
Fairly quiet week ahead on the local data front in New Zealand. Today, Statistics New Zealand will release the monthly 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 on a quarterly basis. On Friday, Business NZ will release the Performance of Manufacturing Index a survey of manufacturers that asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. Statistics New Zealand will release the monthly Visitor Arrivals data and the Reserve Bank of New Zealand will release the quarterly Inflation Expectations survey which measures the percentage that business managers expect the price of goods and services to change annually during the next 2 years.
Key MoversData released in the US overnight revealed that the US Consumer Price Index (CPI) rose 0.4% in April, in line with expectations, and 4.9% YoY, slightly below the 5% of market consensus. The Core CPI grew 0.4% and the annual rate edged lower from 5.6% to 5.5%, both matching market consensus. Looking ahead, we will see the release of the April Producer Price Index (PPI) tonight. But the Core CPI data provided encouragement that some underlying pressures are easing, with rent increases below the past year’s average and services prices excluding housing and energy. The S&P500 was up around 0.3% overnight, driven by tech but with financials and energy. The latter was not helped by a near 2% drop in oil prices as data showed a build in US crude inventory, as demand concerns continue.
The Pound Sterling (GBP) rallied sharply versus the US Dollar (USD) after the release of US Consumer Price Index (CPI) data for April on Wednesday. The pair failed to hold onto its gains, however, and pulled back down to near the 1.2600 level during the latter part of the US Session. Looking ahead and the Pound Sterling will be impacted by the outcome of the Bank of England (BoE) policy meeting on Thursday. A 25 bps interest rate hike is now expected with almost certainty. What is less certain is the bank’s forward guidance, BoE Chairman Andrew Bailey’s comments in the press conference, and the distribution of member votes.
- NZD/USD: 0.6250 - 0.6450 ▲
- NZD/EUR: 0.5700 - 0.5900 ▲
- GBP/NZD: 1.9700 - 1.9900 ▼
- NZD/AUD: 1.0550 - 1.0750 ▼
- NZD/CAD: 0.8400 - 0.8600 ▼