Home Daily Commentaries New Zealand dollar continues to edge higher towards 70 US cents

New Zealand dollar continues to edge higher towards 70 US cents

Daily Currency Update

The New Zealand dollar is stronger this morning when valued against the Greenback, trading just below 70 US cents on higher risk appetite and commodity prices.  The Kiwi dollar made a small gain to 0.6965, failing on three occasions during the past 24 hours to breach the 0.6975 mark. From a technical perspective, the NZD/USD pair is currently trading at 0.6971. We continue to expect support to hold on moves approaching 0.6935, while now any upward push will likely meet resistance around 0.6975.

On the data front yesterday there were no scheduled releases.  The economic calendar in New Zealand is empty for the remainder of this week.  The Federal Open Market Committee (FOMC) has grabbed all the headlines this week with the market now predicting back-to-back 50bps hikes at the Federal Open Market Committee’s next two meetings. The market currently prices in about 42bps of hikes at each of the next two meetings, so a high chance of moving 50bps. This comes as the International Monetary Fund (IMF) says New Zealand’s high levels of household debt, borrowers’ vulnerability to rising interest rates and banks’ high exposure to housing loans could be a risk for the economy.

Key Movers

Overnight we saw the release of the annual UK CPI inflation data. UK CPI inflation was stronger than expected at 6.2% y/y for the headline rate and 5.2% for the core, a fresh 30-year high. New government forecasts showed a projected peak of 8.7% at the end of the year, as higher energy and commodity costs feed through to consumer prices, the government’s fiscal forecast. The projection is above the Bank of England’s current outlook for about 8% and would be the highest since 1982, when the U.K. was still grappling with the aftermath of oil shocks in the 1970s. The Great British pound is the weakest of the majors overnight down almost 0.6%, failing to strengthen after the strong CPI data, suggesting that the upside surprise was well-anticipated.

Expected Ranges

  • NZD/USD: 0.6850 - 0.7050 ▲
  • NZD/EUR: 0.6200 - 0.6400 ▲
  • GBP/NZD: 1.8830 - 1.9030 ▼
  • NZD/AUD: 1.0650 - 1.0850 ▼
  • NZD/CAD: 0.8650 - 0.8850 ▲