Daily Currency Update

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New Zealand retraces from weekly highs

NZD - New Zealand Dollar

The New Zealand Dollar, like the Aussie rallied on Thursday benefiting from weakness in the US Dollar. The NZD/USD pair continued to climb on the open following the Fed’s decision to cut rates by 25 basis points and failed to give a clear message on further easing during the prior session. Supporting the pair was further expectations that the RBNZ will not cut rates at its next meeting on November 13th, the probability of a November OCR cut has now fallen to 54% which saw the NZD/USD touch a high of 0.6432 intraday.

On the data front, all eyes were on New Zealand’s Business Confidence data which picked up after hitting a 10-year low last month, according to a survey by ANZ. The bank said a net 42 percent of respondents still reported that they expected general business conditions to deteriorate in the year ahead. But that was a 12-point improvement from the 54 percent figure in its previous survey. It suggests that GDP growth may continue to slow from its recent pace of 2%

Looking ahead, there are no scheduled releases locally, however, traders will be watching China’s Manufacturing PMI data which is due later today. This manufacturing indicator was slightly stronger in September than the official manufacturing PMI. The index registered 51.4, which indicated a slight expansion. The forecast for the October release is 51.0 points. Out of the US, there is a raft of employment and manufacturing data

On the technical front, the Kiwi is currently trading at 0.6413, we continue to see 0.6340 as near-term support followed by 0.6290. On the upside, resistance is sitting at 0.6430.

Key Movers

Yesterday, as expected the Bank of Japan left rates unchanged but did give a strong signal that they are likely to cut rates in the future. BOJ governor Haruhiko Kuroda said they still had room to take the already negative rates lower in order to prevent global uncertainties from damaging the Japanese economy. USD/JPY is lower on the week buying 108.03.

In other news, China’s manufacturing sector continued to dwell in the doldrums in October, with sentiment among factory operators remaining in negative territory for the sixth month in row. The manufacturing purchasing managers’ index (PMI) slipped below 49.8 in September to 49.3 in October, the figure was the lowest since hitting 49.2 in February. The non-manufacturing PMI, a gauge of sentiment in the services and construction sectors, came in at 52.8 in October down from September’s 53.7, dropping to its lowest level since February 2016.

The US Dollar index (DXY) was lower falling to 97.22 as reports made the news that Chinese officials are reluctant to commit to any long-term deal with President Donald Trump, whom they see as unreliable. US President Trump also tweeted about the Federal Reserve being too slow to cut and that the US dollar and interest rates were hurting US businesses whilst Germany, Japan and all others benefited: “China is not our problem, the Federal Reserve is!”


NZD/AUD: 0.9240 - 0.9360 ▲

GBP/NZD: 2.0000 - 2.0300 ▼

NZD/EUR: 0.5710 - 0.5780 ▲

NZD/CAD: 0.8360 - 0.8500 ▲