Home Daily Commentaries New Zealand dollar continues to hold above the 62 US cents

New Zealand dollar continues to hold above the 62 US cents

Thursday 28 July, 2022

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the US dollar. The NZD/USD pair rebounded by some 0.6% from a daily low of US$0.6191 to a high of US$0.6277 on Wednesday as the Federal Reserve confirmed the market's dovish sentiment. The kiwi is among the worst performers on Wednesday hit by a rally in AUD/NZD and the caution across financial markets. The cross broke a critical resistance area at NZ$1.1100 and jumped to test the four-year high at NZ$1.1165/70. So far in 2022, the New Zealand dollar has registered a loss of 8.77% against the US dollar but a gain of 2.40% against the pound and a gain of 2.3% against the euro.

There were no scheduled releases in New Zealand yesterday.  Looking ahead today and all eyes will be on ANZ Business Confidence a leading indicator of economic health, a survey of about 1,500-2,000 businesses which asks respondents to rate the relative 12-month economic outlook. On Friday we will see the release of the Reserve Bank of New Zealand (RBNZ) Statement of Intent which provides insights into the bank's strategic priorities for the next financial year.

Key Movers

Overnight the US Federal Reserve made history with a second 75-basis-point rate hike in as many months. At the conclusion of its July monetary policymaking meeting, members of the US central bank on Wednesday once again approved an interest rate hike of three-quarters of a percentage point. Members voted unanimously in favour of the aggressive move to tackle rising inflation. The US Federal Reserve’s actions will increase the rate that banks charge each other for overnight borrowing to a range of between 2.25 per cent to 2.50 per cent, the highest since December 2018. The US Federal Reserve must execute a delicate balancing act or its strategy could slow economic growth while inflation is still growing. In the last 11 tightening cycles, the US Federal Reserve has only successfully avoided recession three times. During each of those cycles, inflation was lower than it is today. That has made some analysts and market participants nervous.

Expected Ranges

  • NZD/USD: 0.6150 - 0.6350 ▼
  • NZD/EUR: 0.6050 - 0.6250 ▼
  • GBP/NZD: 1.9300 - 1.9500 ▲
  • NZD/AUD: 1.1050 - 1.1250 ▼
  • NZD/CAD: 0.7900 - 0.8100 ▲