Home Daily Commentaries NZD holding above the 62 US cents

NZD holding above the 62 US cents

Daily Currency Update

The New Zealand dollar is broadly unchanged over the past 24 hours trading holding just above 62 US cents against the US dollar. Yesterday we saw the Kiwi dollar pushed up to around US$0.6270, its highest level in almost a month, before easing back to around US$0.6230 this morning.  There haven’t been any major spillovers from the Italian political uncertainty to broader risk appetite, and by extension the Kiwi dollar, at this stage.  On the data front, the local Dairy auction prices posted a significant fall overnight. Overall prices slid 5.1%, while key whole milk powder (WMP) prices were down 5.0%. The price weakness was also broad-based. All five products on offer fell, with skim milk powder prices posting the largest fall (down 8.6%). Anhydrous milk fat, butter and cheese all posted price declines of around 2%.

Looking ahead today and we will see the release of NZ Trade Balance and Credit Card Spending. On Friday we will see the release of the Reserve Bank of New Zealand Statement of Intent which provides insights into the bank's strategic priorities for the next financial year. From a technical perspective, the NZD/USD pair opened around US$0.6220. At the time of writing, the NZD/USD is trading at US$0.6224, barely up 0.05%. The NZD/USD resistance levels would be US$0.6272, followed by US$0.6300, and US$0.6314. On the flip side, the NZD/USD first support would be US$0.6200. A break below will expose the Kiwi dollar at US$0.6195, followed by US$0.6100.

Key Movers

Overnight the UK headline inflation continues to rise, hitting 9.4% in June, slightly higher than expected.  The Bank of England expects headline inflation to reach 11% later this year after energy companies increase prices.  There wasn’t much reaction in either the GBP or UK rates, with the inflation numbers coming close to expectations and investors more focused on developments in Europe over the next 48 hours. The British pound is down around 0.2%, to US$1.1970, overnight.

In the US overnight, US equities pushed higher again (S&P500 +0.6%, NASDAQ +1.5%) and the US 10-year Treasury yield pushed up to 3.04%. The Nasdaq rose on Wednesday after a positive forecast from Netflix added to largely upbeat second-quarter earnings from US companies against the backdrop of rising recession fears from the Federal Reserve's efforts to tame surging inflation. Netflix Inc's shares gained 3% after the company predicted it would return to customer growth during the third quarter while posting a smaller-than-forecast 1 million drop in subscribers in the second quarter.

Expected Ranges

  • NZD/USD: 0.6100 - 0.6300 ▲
  • NZD/EUR: 0.6000 - 0.6200 ▲
  • GBP/NZD: 1.9100 - 1.9300 ▼
  • NZD/AUD: 0.9039 - 0.9084 ▲
  • NZD/CAD: 0.7900 - 0.8100 ▲