Home Daily Commentaries New Zealand dollar trades back above 59 US cents

New Zealand dollar trades back above 59 US cents

Daily Currency Update

The NZ dollar is slightly stronger this morning when valued against the Greenback. The Kiwi dollar trimmed some of its losses against the Greenback posting a solid gain of 0.37% on Monday as US Treasury bond yields retrace from last week’s high, ahead of the following US Federal Reserve’s monetary policy decision.

The NZD/USD is trading at 0.5906 at the time of writing after hitting a daily low of 0.5895. However, downbeat economic data from New Zealand could put a ceiling on the potential of the pair. The Business NZ PSI report printed a reading of 47.1 lower than the previous 47.8 figure, which showed that business conditions in the service sector weakened in August.

On the data front today there are no scheduled releases. Tomorrow in New Zealand we will see the release of the Current Account which is directly linked to currency demand. A rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country.

This is among the few non-seasonally adjusted numbers reported on the calendar, as it's the data most commonly reported. The goods portion has no impact because it's a duplicate of the monthly Trade Balance data.

On Thursday this week, we will see the release of NZ Gross Domestic Product (GDP) which is the broadest measure of economic activity and the primary gauge of the economy's health. The consensus Forecasts showed the annual average GDP growth is expected to decelerate to 0.4% from 0.6% previously in the year ending March 2024.

Key Movers

Looking ahead this week, the Federal Reserve is not expected to alter short-term rates from their current 5.25%-5.5% level at the next rate announcement on September 20. However, the projections and press conference associated with the meeting will help signal whether rates could be increased at one of the remaining two Fed meetings of 2023.

The September meeting will disclose the latest Summary of Economic Projections from Fed decision-makers. This includes a set of forecasts for year-end interest rates. For 2023, this will signal where policymakers see rates going at the November and December Fed meetings.

Last week, the US economy witnessed an uptick in inflation on the consumer and producer side while the jobs market remains hot. Retail sales expanded slower than estimated but remained solid above the 2% threshold. Nevertheless, consumer sentiment slipped, blamed on elevated gasoline prices, as revealed by a University of Michigan poll (UoM).

Expected Ranges

  • NZD/USD: 0.5800 - 0.6000 ▲
  • NZD/EUR: 0.5450 - 0.5650 ▲
  • GBP/NZD: 2.0800 - 2.1000 ▼
  • NZD/AUD: 1.0750 - 1.0950 ▼
  • NZD/CAD: 0.7850 - 0.8050 ▼