Home Daily Commentaries New Zealand dollar trades below 61 US cents

New Zealand dollar trades below 61 US cents

Daily Currency Update

The Kiwi dollar is slightly weaker this morning when valued against the Greenback. The NZD/USD pair erased gains which saw the Kiwi surging to the 0.6110 area at the end of the week and falling towards the 0.6065 area, in response to strong labor market data from the US. The Kiwi dollar is currently trading at 0.6056 at the time of writing. The NZD/USD pair holds a bearish outlook for the short term as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest that the sellers are in control while the pair trades below its main moving averages. In case of further downside, support levels line up at the 0.6050 area and below at the 0.6025 zone and the 0.60 psychological mark. On the upside, resistances line up at the daily high around 0.6111 followed by the 200 and 20-day Simple Moving Average (SMA) at 0.6150 and 0.6180 respectively.
Looking at the week ahead and New Zealand banks will be closed today in observance of the King's Birthday. On Tuesday we will see the release of the Australia and New Zealand Banking Group (ANZ) Commodity Price Index which tends to have a muted impact because the tightly-correlated Australian commodity prices are usually released a few days earlier. On Wednesday we will see the release of the Global Dairy Trade (GDT) a leading indicator of the nation's trade balance with other countries because rising commodity prices boost export income. Finally on Thursday Statistics New Zealand will release the quarterly Manufacturing Sales.

Key Movers

US President Joe Biden has signed legislation lifting the nation's debt ceiling and averting an unprecedented default on the federal government's debt. It was a decidedly low-key outcome to a months-long drama that unnerved finance markets both in the US and abroad. The legislation was signed with just two days to spare until the Treasury Department warned the country would start running short of cash, which would have sent shock waves through the US and global economies. The stand-off began when Republicans refused to raise the country's borrowing limit unless Democrats agreed to cut spending. Eventually, the White House began weeks of intense negotiations with House Speaker Kevin McCarthy to reach a deal.
On the data front Inflation in the US, The US Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls rose 339,000 in May. This reading surpassed the market expectation of 190,000 by a wide margin. April's reading of 253,000 also got revised higher to 294,000. The Unemployment Rate climbed to 3.7% from 3.4% in the same period, while the Labor Force Participation rate remained unchanged at 62.6%. Finally, annual wage inflation, as measured by the change in Average Hourly Earnings, edged lower to 4.3% from 4.4%. Markets are still pricing in a nearly 70% probability of the US Federal Reserve leaving its policy rate unchanged on June 13-14.

Expected Ranges

  • NZD/USD: 0.5950 - 0.6150 ▼
  • NZD/EUR: 0.5550 - 0.5750 ▼
  • GBP/NZD: 2.0400 - 2.0600 ▲
  • NZD/AUD: 1.0800 - 1.1000 ▼
  • NZD/CAD: 0.8050 - 0.8250 ▼