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New Zealand dollar hits highest level since January

NZD - New Zealand Dollar

The New Zealand dollar is stronger this morning when valued against the Greenback, reaching a high on Friday of 0.6742, rising 1.6% its highest against the U.S. dollar since January. Over the last week the Kiwi dollar has strengthened by more than 3% against the Greenback. The RBNZ kept its bond buying for this week unchanged at $1.35b in government bonds ($1.25b nominal bonds and $100m in inflation-indexed bonds) and $50m in local government bonds. On Friday we saw the release of the Fed Chair Jerome Powell’s speech at the Jackson Hole Monetary Policy Symposium, which Powell said the U.S. central bank would seek to keep inflation at 2%, on average, so that periods of too-low inflation would likely be followed by an effort to lift inflation above 2% for some time.

On the data front this week in New Zealand, on Monday we see the release of ANZ Business Confidence. On Tuesday we will see the release of Monthly Building Consents, a leading gauge of future construction activity. On Wednesday we will see the release of the Global Dairy Trade (GDT) a leading indicator of the nation's trade balance. From a technical perspective, the NZD/USD pair is currently trading at 0.6734. We continue to expect support to hold on moves approaching 0.6700, while now any upward push will likely meet resistance around 0.6780.

Key Movers

On Friday the greenback resumed its slide against a basket of major currencies in the wake of Fed Chair Jerome Powell’s remarks at the virtual Jackson Hole conference. U.S Fed Chair Jerome Powell said the U.S. central bank would seek to keep inflation at 2%, on average, so that periods of too-low inflation would likely be followed by an effort to lift inflation above 2% for some time. Over the last week we have seen both the dovish Federal Reserve policy and a sluggish U.S. economic recovery have accelerated the weakness in the Greenback. On the data front on Friday we saw the release of July Personal Spending and Personal Income, which increased by 0.4% and 1.9% respectively, while PCE inflation in the same month rose to 1.3% YoY, better than the 1.2% forecast. Looking ahead this week in the United States and on Thursday we will see the release of monthly Trade Balance figures. On Friday all eyes will be on the Employment figures with the forecast for unemployment rate to come in at 9.8% down from previous 10.2% the previous month.

Expected Ranges

NZD/USD: 0.6650 - 0.6850 ▲

NZD/EUR: 0.5550 - 0.5750 ▲

GBP/NZD: 1.9720 - 2.0025 ▼

NZD/AUD: 0.9050 - 0.9250 ▲

NZD/CAD: 0.8720 - 0.8920 ▲