Home Daily Commentaries New Zealand dollar trades below US$0.62 

New Zealand dollar trades below US$0.62 

Brett Ottawa
Written by
Brett Ottawa

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market.

| Monday 9 September, 2024

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.6163 at time of writing. The NZD/USD pair has been trading within a narrow range, but Friday's sharp decline has shifted the technical outlook to bearish. Current market correlations suggest NZD could be set to register further declines if equity markets decline further over the coming days, as it is highly sensitive to global investor sentiment. Looking ahead this week on the data front, on Tuesday Statistics New Zealand will release the latest quarterly Manufacturing Sales. On Wednesday we will see the latest monthly Visitor Arrivals. Tourism plays an important role in the economy - about 7% of the population is employed by the tourism industry, and a sizeable portion of the nation's GDP is indirectly related to tourism. On Thursday we will see the release of 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. Finally, on Friday BusinessNZ will release the Performance of 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

Non Farm Payrolls (NFP) in the US rose by 142,000 in August, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 89,000 increase (revised from 114,000) recorded in July and fell short of the market expectation of 160,000. Other details of the report showed the unemployment rate edged lower to 4.2%, with the Labor Force Participation unchanged at 62.7%. Finally, wage inflation, as measured by the change in Average Hourly Earnings, rose to 3.8% from 3.6% in July. While markets have ramped up their bets in favour of a rate reduction from the Fed this month, the data in itself hasn’t been sufficient to seal the deal for a 50 basis point cut, which remains less than 60% priced in by futures markets. Next week’s CPI report for August will now be key, as a miss here may be required for the FOMC to go big in September. Looking ahead this week and the August CPI inflation (Consumer Price Index) data will be widely watched on Wednesday. According to the Reuters poll, economists estimate headline YoY inflation to ease to +2.6%, 0.3 percentage points down from +2.9% in July (estimate range between +2.6% and +2.4%). The debate about whether the Fed will opt for a 25 or 50 basis point cut remains ongoing.

Expected Ranges

  • NZD/USD: 0.6050 - 0.6250 ▼
  • NZD/EUR: 0.5450 - 0.5650 ▼
  • GBP/NZD: 2.1150 - 2.1350 ▲
  • NZD/AUD: 1.0750 - 1.0950 ▼
  • NZD/CAD: 0.8250 - 0.8450 ▼

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.