Home Daily Commentaries New Zealand dollar continues to trade above 63 US cents

New Zealand dollar continues to trade above 63 US cents

Daily Currency Update

The New Zealand dollar closed the week stronger against the Greenback holding around US 0.63c on Friday, lifted by a global rally in risk assets and on expectations of domestic interest rate increases. While Friday was a public holiday in New Zealand we saw a more positive turn in risk sentiment towards the end of the week which supported the commodity currencies with the Kiwi dollar up 0.9% to 0.6320.

In the week ahead, the domestic calendar remains light, but with interest later in the week on how much deeper NZ business confidence and activity indicators might have fallen and whether consumer confidence can fall any further from an already rocket-bottom level on the ANZ survey. New Zealand releases ANZ business confidence on Thursday and ANZ consumer confidence on Friday. Both have downside risks as interest rate rises and cost-of-living increases continue to bite, and weak data could spur local equity selling.

Key Movers

Stocks racked up more gains on Wall Street Friday, as the S&P 500 had its best day in two years and just its second winning week in the last 12 to provide a bit of relief from the market’s brutal sell-off this year. The S&P500 surged over 3% on Friday, adding to gains seen earlier in the week. After falling as low as 3.00% late last week the US 10-year rate closed at 3.13%. On the data front last week we saw the release of the final University of Michigan survey and US new homes sales for the month of May which surprisingly surged by over 10%. However the market was more fixated on the inflation expectations section of the University of Michigan survey, which showed the final estimate revised down from 3.3% to 3.1% for the 5-10 years ahead measure.

Looking ahead this week In the US attention will likely continue to be on how the Federal Reserve evaluates the current outlook between high inflation and recession fears. Regarding data, the Personal Consumption Expenditures (PCE report) on Thursday will be the most important followed by the ISM Manufacturing on Friday which is a leading indicator of economic health.  On Wednesday Federal Reserve Chair Jerome Powell will speak as he attends the ECB Forum on Central Banking.

Expected Ranges

  • NZD/USD: 0.6200 - 0.6400 ▲
  • NZD/EUR: 0.5900 - 0.6100 ▲
  • GBP/NZD: 1.9300 - 1.9500 ▼
  • NZD/AUD: 1.0850 - 1.1050 ▼
  • NZD/CAD: 0.8050 - 0.8250 ▲