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NZD weakest of the G10 currencies

NZD - New Zealand Dollar

The NZD was the weakest of the G10 currencies last week, as it rose steadily throughout trade on Friday after a heavy decline, to open this morning at 0.6636 against the USD. The deterioration of the Kiwi is owing to the market possibly adjusting to a 0.75% OCR rate that may come into play in November.

Currently the Overnight Cash Rate is 1.5%, but Westpac economists predict that this rate will be cut twice, or even three times this year, bringing it to an all-time low of 1%, or even 0.75% due to rising unemployment. The change in the OCR will heavily impact asset markets, particularly house prices.

In metronomic news, ANZ will be releasing their Business Confidence report on Wednesday morning. Showing the level of diffusion index based on surveyed businesses, the report is a leading indicator of economic health as businesses react quickly to market conditions. This report is expected to have a major impact on the Kiwi.

Key Movers

Brexit is still holding all the headlines as new Prime Minister Boris Johnson has stated he is fully committed to a ‘no deal’ Brexit, and intends to delivery it by the 31st of October by “any means necessary”. The GBP will also see further movements with the Bank of England (BOE) rate meeting this Thursday evening, where the expectation is that the committee will vote to maintain the Bank rate at 0.75%.

On the trade-front, US Trade Representative Lightziger and US Treasury Secretary Mnuchin will travel to China this upcoming week to continue negotiations with China. Trump has reported that China may hold off on agreeing to a deal until after the election next year.

US employment data is also scheduled to be released late Friday night. The Non-Farm Employment Change and Unemployment Rate show the figures of employed and unemployment people during the previous month, and is a heavy driver for the USD.

Expected Ranges

NZD/AUD: 0.9575 - 0.9660 ▲

NZD/CAD: 0.8690 - 0.8780 ▼

NZD/EUR: 0.5935 - 0.6015 ▲

GBP/NZD:1.8470 - 1.8780 ▲

NZD/USD: 0.6585 - 0.6985 ▼