Home Daily Commentaries New Zealand dollar trades below 62 US cents

New Zealand dollar trades below 62 US cents

Daily Currency Update

The Kiwi dollar is weaker this morning when valued against the Greenback. The higher risk appetite backdrop saw a generally weaker Greenback on Friday night, but the Kiwi dollar underperformed. Temporarily falling back below 0.62 before closing at just over 0.6220. This might have reflected some payback from its outperformance mid-week after the strong China PMI data. The Kiwi asset is looking to stretch its recovery above the immediate resistance of 0.6230 as the US Dollar Index (DXY) has witnessed a loss in the upside momentum. The upside in the Kiwi asset looks favored as the risk appetite of the market participants is improving. On the technical front, the Kiwi crosses were flat-to-higher for the week, they were modestly lower on Friday night. The Aussie Dollar closed the week at 0.6760, with NZD/AUD heading back below 0.92 levels. NZD/GBP ended the week around 0.5160 and NZD/EUR at 0.5840. The lower rates backdrop supported the yen, with USD/JPY back below 136, and NZD/JPY at 84.4.
Looking ahead this week on Monday we will see the release of the Australia and New Zealand Banking Group (ANZ) Commodity Price Index which measures the average price of the nation's main commodity exports are sampled on the global market and then compared to the previous sampling. On Friday we will see the release of the Caixin Services PMI (Feb) data. The economic data is likely to drop to 50.5 vs. the prior figure of 52.9. It is worth noting that New Zealand is one of the leading trading partners of China and a decline in the Services PMI might impact the New Zealand Dollar ahead.

Key Movers

In the US on Friday night sentiment remains upbeat, a headwind for the safety of the US Dollar. The US ISM Non-Manufacturing PMI for February was 55.1, slightly lower than the previous month’s 55.2. However, it exceeded expectations of 54.5, indicating that business activity is still strong. The Prices Paid Index subcomponent, looked by investors for inflationary pressures, increased to 65.6, above estimates of 64.5. Although it was lower than January’s 67.8, data would keep traders tracking Federal Reserve’s (Fed) officials’ speakers throughout the day.
The Dow Jones Industrial Average rallied 1.2 per cent, the S&P 500 1.6 per cent, and the Nasdaq Composite added nearly 2 per cent on Friday. The former Treasury secretary Larry Summers said Fed policymakers should highlight that a return to supersized interest rate increases was possible this month after robust economic data. Looking ahead this week and we will hear from a few Federal Reserve speakers who will be crossing wires led by the Dallas Fed President Lorie Logan, Atlanta’s Fed Raphael Bostic, Fed Governor Michell Bowman, and the Richmond Fed President Thomas Barkin. The market clearly favours the Fed moving in 25bps steps, with Fed Fund futures for the March meeting showing 31bps priced in, much closer to 25bps than 50bps.

Expected Ranges

  • NZD/USD: 0.6100 - 0.6300 ▼
  • NZD/EUR: 0.5750 - 0.5950 ▼
  • GBP/NZD: 1.9100 - 1.9300 ▲
  • NZD/AUD: 1.0700 - 1.0900 ▼
  • NZD/CAD: 0.8330 - 0.8530 ▼