NZD - New Zealand Dollar
It was a quiet day initially for the New Zealand dollar on Wednesday, trading in a tight 10 pip range during the domestic trading session. Opening the morning at 0.6675, there was little price action following a fourth consecutive drop in dairy product prices as the GDT price index fell 0.4%.
Given the dairy sector contributes 3.5% to the countries total GDP, investors will be looking closely at any declines to support a further drop in interest rates set by the RBNZ. A decline in the ANZ world commodity price index of 3.9% m/m in June was the first decrease this year as dairy prices recorded an 8.5% drop and the main driver lower.
The NZD/USD tested 67 US cents overnight, reaching a high of 0.6720 against the greenback as a drive in all time equity index levels and a poor ADP non-farm employment release was the main catalyst for a 0.4% movement in the positive.
From a technical perspective, the Kiwi is currently trading at 0.6705. We continue to expect support to hold on moves approaching 0.6660 while any upward push will likely meet resistance at 0.6740.
Gains on equity markets globally were the main catalyst for an improvement in risk appetite overnight. Main gains were on higher yielding currencies such as the AUD and NZD as the US Dollar index (DXY) finished flat for the day.
ADP non-farm payrolls missed the mark coming in at 104,000 jobs added in the private sector. Well below forecasts of 140,000 jobs heading into the 4th of July holiday celebrations, liquidity in the markets is expected to thin out into the weekend. As market expectations rise for the Federal Reserve to start cutting rates as early as July’s meeting, ISM non-manufacturing data fell well short of its expectation and its lowest reading since 2017, causing the greenback to edge slightly lower on release.
The US Dollar in general was lower against commodity-based currencies with slight gains seen against the EUR and Sterling. With a lack of data scheduled for released on Thursday, it is expected that further moves on currency markets will be largely dictated by the release of Non-Farm payroll figures on Friday evening.
0.6660 - 0.6740 ▲NZD/AUD:
0.9500 - 0.9600 ▼GBP/NZD:
1.8600 - 1.9000 ▼NZD/EUR:
0.5900 - 0.6000 ▲NZD/CAD:
0.8700 - 0.8800 ▲