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Kiwi holds on to 0.67 amidst resurgent Greenback

NZD - New Zealand Dollar

The Greenback enjoyed moderate gains across the board overnight as US data surprised to the upside despite Fed Chair Powell reiterating the risks to the outlook. Within this context, the New Zealand dollar faltered and slipped to open this morning at 0.67 after enjoying a mostly positive Asian session earlier in the day, reaching highs of around 0.6739. It wasn’t an entirely quiet day domestically though with NZ CPI data released early in the session. Fortunately for the Kiwi, it came in as widely expected and had only a marginal impact on the Kiwi’s trajectory. NZ annual CPI inflation ticked up to 1.7% on an annual basis and was in line with RBNZ expectations. The result suggests inflation will be well contained but nevertheless, the market continues to place a heavy weight on another rate cut in the next few months.

The New Zealand dollar is now set to enjoy a quiet day on the domestic economic calendar with little to digest. All eyes will however look to the UK where their CPI reading is due for release later this evening.

 

Key Movers

The United States dollar was the strongest performer overnight and enjoyed broad based gains against a number of counterparties. Well supported by domestic data, the US DXY surged 0.46% to reach 97.38 against a basket of currencies despite Fed Chair Powell reiterating the risks to the outlook. The Greenback found its support from domestic data which were certainly on the stronger side. US Retail Sales led the way with a surprising, positive result above expectations and the data also suggests that real consumer spending bounced back over the quarter. Industrial Production was however, relatively flat but the NAHB housing market index continued to trend higher. Overall, some of the components of GDP strengthened considerably overnight and saw upward revisions of annual GDP estimates.

Within this context, the case for interest rate reductions by the Fed have been undermined but Fed Chair Powell nevertheless kept the door open for further rate cuts. Speaking in Paris, Fed Chair Powell reiterated his message from last week and commented that the Fed is carefully monitoring the downside risks to US growth and will act appropriately to sustain expansion.

Expected Ranges

NZD/AUD: 0.9504 - 0.9599 ▲

NZD/CAD: 0.8736 - 0.8799 ▲

NZD/EUR: 0.5936 - 0.6006 ▲

GBP/NZD: 1.8474 - 1.8561 ▼

NZD/USD: 0.6649 - 0.6754 ▲