New Zealand dollar dips below US$0.62
Monday 22 August, 2022
Daily Currency UpdateThe New Zealand dollar dipped to a one-month low on Friday and below US$0.62 following a surge back into the US dollar on recession fears globally. Opening at US$0.6255, the local currency continued its path lower following mixed trade data as the New Zealand Trade Balance dropped by $1.092 billion.
Reserve Bank of New Zealand (RBNZ) Governor Orr remained hawkish on Friday, commenting they would go beyond a “neutral rate” if required as domestic demand runs hot. The RBNZ lifted rates last week by another 50 basis points to 3% as markets price another 50 basis points by year-end. The comments by Orr were not enough to salvage the New Zealand dollar finishing 1.32% lower to US$0.6173.
The New Zealand dollar opens this morning at US$0.6175. We expect support levels to hold onto moves approaching US$0.6140, while any upward push will likely meet resistance at US$0.62.
Key MoversOn Friday, the US dollar was a key mover as recession fears saw a sell-off on equities as treasury yields moved higher. The Nasdaq was the biggest casualty for the day as tech stocks moved lower on fears the Federal Reserve Bank needs to be even more aggressive with its interest rate hikes.
With another month to go until the Federal Open Market Committee’s (FOMC) next interest rate meeting, investors have started to get jittery about rising inflation which is at decade highs in the United States. Citi has forecast UK inflation to peak at 15% in Q1 2023 despite hitting a forty-year high last week of 10.1%. The US Dollar Index (DXY), which measures a basket of currencies against the world's most traded currency, rose 0.57% on the day to finish at US$1.0810.
Elsewhere Japanese inflation hit an 8-year high to reach 2.4% but is unlikely to change the Bank of Japan’s ultra-loose monetary policy despite being above its inflation target of 2%. Notwithstanding the higher rate, the US dollar was higher on the day and finished at ¥136.86. The British pound also finished lower at £1.1824 despite retail sales rising 0.3% for July. Monday looks to be a quiet day as the market positions itself this week ahead of the Jackson Hole Symposium due to start on Thursday evening.
- NZD/USD: 0.6140 - 0.6200 ▼
- NZD/EUR: 0.6120 - 0.6200 ▼
- GBP/NZD: 1.9000 - 1.9300 ▲
- NZD/AUD: 0.8950 - 0.9020 ▼
- NZD/CAD: 0.7980 - 0.8060 ▼