Daily Currency Update
The Kiwi dollar is slightly stronger this morning when valued against the Greenback trading above 61 US cents. The NZD/USD is continuing its climb as the Kiwi stands out as the single best-performing currency of the major currencies bloc, up 2% against the US Dollar for the trading week. The NZD/USD pair received upward support as the US Dollar which drifted lower on the back of subdued US bond yields. On the local data front, the Roy Morgan Consumer Confidence index rose 4 points in November to 91.9, an improvement but still subdued. Despite the improvement, significant headwinds remain for retailers under declining retail spending as consumers remain gloomy. Consumers' 12-month expectations declined 3 points to -21%, while the 5-year outlook rose to 9% from 5%. Two-year look-ahead CPI expectations saw a slight uptick from 4.5% to 4.6% as consumers fear long-run inflation gripping the New Zealand economy. Last week the Reserve Bank of New Zealand (RBNZ) held interest rates at 5.5% this week, but a hawkish stance from New Zealand’s central bank is propping up the Kiwi, with RBNZ officials actively weighing additional rate hikes with inflation continuing to fall outside of the RBNZ’s target 1-3% band for so long.
Key Movers
In the United States on Friday for the 12th consecutive month, the US manufacturing sector experienced a contraction in economic activity in November. The ISM Manufacturing PMI remained unchanged at 46.7, lower than the market's expectation of 47.6. The US Dollar Index pulled back modestly after the ISM report, falling toward the 103.50 area. However, EUR/USD remained near daily lows at 1.0850. The US stock market indices ended higher on Friday with the S&P registering its highest close of the year on Friday, as remarks from US Federal Reserve Chair Jerome Powell bolstered the view that key policy rates have peaked. The Dow Jones Industrial Average rallied 294.61 points, or 0.82%, to end at 36,245.5, while the S&P 500 surged 26.83 points, or 0.59%, to 4,594.63 -- its highest level since March 2022. The Nasdaq Composite closed 78.81 points, or 0.55%, higher at 14,305.03. US Treasuries also gained and yields dropped amid rising bets on interest rate cuts next year. The yields on two-year US Treasuries declined 9 basis points (bps) to below 4.6%. Next week has a fairly thin showing for the economic data calendar, but eyes will be turning towards next Friday’s US Non-Farm Payrolls release, where the US is expected to see a marginal gain in the number of new job hires from 150K to 170K in November.
Expected Ranges
- NZD/USD: 0.6050 - 0.6250 ▲
- NZD/EUR: 0.5550 - 0.5750 ▲
- GBP/NZD: 2.0200 - 2.0400 ▼
- NZD/AUD: 1.0600 - 1.0800 ▲
- NZD/CAD: 0.8250 - 0.8450 ▼