Home Daily Commentaries New Zealand Dollar drops to two-year lows

New Zealand Dollar drops to two-year lows

Daily Currency Update

The New Zealand dollar dropped on Friday to its weakest level in nearly two years and a seven percent fall for the month as demand for riskier assets declined on fears of a global recession. Opening at 0.6488, the NZD/USD cross ascended to post intraday highs during the European session of 0.6543.

Demand for safe-haven currencies was in play to close the week as Wall Street saw its biggest daily losses in two years. Tech stocks were sold off in droves, the Nasdaq recording a 4.2% drop and S&P 500 declining 3.6%. Oil fell on the day despite seeing a monthly gain as the commodity-linked currency saw a full cent decline from its daily high and close 0.5% lower at 0.6455.

The New Zealand dollar opens slightly higher this morning at 0.6464 as markets look towards Wednesday's labour report for the quarter. We expect support levels to hold onto moves approaching June 2020 lows of 0.6380 while any upward push will likely meet resistance at 0.6480.

Key Movers

The US dollar index soared to twenty-year highs this week but could not sustain its rally on Friday, falling 0.44% on the day to 103.20. Posting its best month since 2015, a hawkish Federal Reserve has put the greenback firmly in demand. Markets look towards this week’s FOMC committee meeting on Wednesday evening where markets are pricing a 97% chance that the Federal Reserve Chairman will deliver a 50 basis points hike to the target range of 75-100 bps.

On the macro front, consumer spending was strong in the United States, seeing a 1.1% gain for the month. Revised University of Michigan inflation expectations soared to a 40 year high of 5.4% as consumer confidence declined on looming inflation concerns.

Elsewhere the EUR/USD saw a five-year low last week to 1.0470 before the greenback gave back most of the gains on Thursday to finish 0.41% higher on Friday to 1.0541. Sterling was 0.92% stronger at 1.2568 and the greenback lost ground against the Japanese Yen (1.2985) to finish 0.72% lower.

Expected Ranges

  • NZD/USD: 0.6380 - 0.6480 ▼
  • NZD/EUR: 0.6100 - 0.6160 ▼
  • GBP/NZD: 1.9250 - 1.9700 ▲
  • NZD/AUD: 0.9100 - 0.9200 ▼
  • NZD/CAD: 0.8270 - 0.8340 ▼