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New Zealand Dollar at risk to fall under 66c against the U.S Dollar

NZD - New Zealand Dollar

In the absence of any local data on Friday the New Zealand dollar did very little intraday moving within an 18-pip range of 0.6608 and 0.6626. This is quickly changed once the European and North American sessions were underway with pair taking direction from offshore events. NZD/USD posted a gain touching a high of 0.6653 on the back of weaker than expected labour data in the US however all gains have been quickly reversed with the pair gapping considerably lower on the open this morning at 0.6602. Also weighing on the pair is 55% chance the RBNZ will cut.

The RBNZ meets on Wednesday on this week and is unexpected to cut interest rates, traders are pricing in a 55% chance of a rate cut. It is likely the Bank will maintain their easing bias and repeat their view that the more likely next move in the official cash rate is down.

Adopting a technical viewpoint, we see initial NZD/USD support at 0.6600 (psychological level) on the downside followed by 0.6580. On the topside, a sustained move above 0.6633 will indicate some buying activity and if there is enough upside momentum then look to a rally towards 0.6680.

Key Movers

The U.S. dollar index was down on Friday ending a two-week winning streak. The Index fell by 0.34% to 97.25 on the back of soft wage growth data. Nonfarm payrolls rose by 263,000 compared to expectations for a 181,000 gain. Meanwhile the unemployment rate fell to its lowest level in more than 49 years to 3.6%, but average hourly earnings, an important number to gauge inflation, rose 0.2% below expectations for a 0.3% rise.

In the UK, the Pound Sterling soared into the weekend and became the weeks best preforming currency following a poor performance by Labour and the Conservatives in the local elections. Local news outlets believe this may have heightened the incentive to agree a deal in cross-party talks and move the agenda away from Brexit. GBP/USD rose just over 1% and closed the week at 1.3171

Over in Europe, the Euro didn’t pay much attention to better-than-expected April Eurozone CPI data. Rather, it tuned in to broad US Dollar weakness following the jobs report that saw bond yields fall and the S&P 500 rise in risk-on trade. EUR/USD closed the first week of May 1.12008.

Expected Ranges

NZD/USD: 0.6550 - 0.6660 ▼

NZD/EUR: 0.5860 - 0.5960 ▼

NZD/AUD: 0.9410 - 0.9520 ▲

GBP/NZD: 1.9650 - 2.0000 ▲

NZD/CAD: 0.8840 - 0.8930 ▼