New Zealand dollar continues to trade below US$0.60
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Daily Currency Update
The New Zealand dollar is slightly weaker this morning when valued against the Greenback, currently trading at 0.5924 at time of writing. The Kiwi dollar met with a fresh supply on Friday and drops to a fresh daily low following the release of weaker Chinese trade data on Friday. Spot prices reverse the previous day's modest recovery gains and currently trade near the lower end of the weekly range, around the 0.5970-0.5975 region. Last week the Reserve Bank of New Zealand left the cash rate on hold at a 15-year high of 5.5 per cent, where it has been since May last year. It also lowered its cash rate peak forecast to 5.6 per cent, from 5.69 per cent previously, indicating little prospect of lower rates before mid-2025. Before the meeting, the market had priced in a 25 per cent chance of a rate increase on Wednesday, rising to 50 per cent for May and ANZ earlier this month forecast as many as two more increases by the central bank this year. The central bank said that overall, risks to the outlook for inflation were more balanced than at the time of their November statement. Looking ahead this week and on Wednesday all eyes will be on the quarterly Consumer Price Index (CPI) release. This is extremely late relative to inflation data from other countries, but it's the primary gauge of consumer prices and tends to create hefty market impacts. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. CPI is expected to increase from 0.5% to 0.6% from the previous quarter.Key Movers
The US Dollar Index (DXY) is trading above the 106.00 mark, attaining its highest level since early November. The Index's upward movement is largely driven by rising US yields and a hot inflation data environment that favours the US dollar. In addition, Federal Reserve (Fed) officials expressed fewer possibilities for rate cuts this year, and an increase in hawkish bets is another driver boosting the currency. Last week inflation in the US, as measured by the change in the Consumer Price Index (CPI), rose to 3.5% on a yearly basis in March from 3.2% in February, the US Bureau of Labor Statistics (BLS) reported on Wednesday. This reading came in above the market expectation of 3.4%. The annual core CPI, which excludes volatile food and energy prices, rose 3.8% in the same period, matching February's increase. On a monthly basis, the CPI and the core CPI both rose 0.4%, compared to analysts' estimate of 0.3%. Gold price finished the week with modest gains of 0.59% after reaching an all-time high during the North American session on Friday. Price action was volatile as geopolitical risks sparked a flight to safe-haven assets, driving the non-yielding metal toward $2,431, a new all-time high, before retreating on overall US dollar strength. At the time of writing, the XAU/USD exchanges hands at $2,343, down 1.18%. U.S. energy shares are soaring as investors benefit from rising oil prices and a stronger-than-expected economy, while seeking to protect their portfolios from a feared resurgence of inflation. The S&P 500 energy sector is up about 17% in 2024, roughly doubling the broader index's year-to-date return. Its gains have accelerated in recent weeks, making it the S&P 500's best performing sector in the past month.Expected Ranges
- NZD/USD: 0.5850 - 0.6050 ▼
- NZD/EUR: 0.5450 - 0.5650 ▼
- GBP/NZD: 2.0800 - 2.1000 ▲
- NZD/AUD: 1.0750 - 1.0950 ▼
- NZD/CAD: 0.8050 - 0.8250 ▼