Home Daily Commentaries New Zealand dollar holds above 62 US cents

New Zealand dollar holds above 62 US cents

Daily Currency Update

The Kiwi dollar is slightly weaker this morning when valued against the Greenback. The Kiwi dollar closed the week just over 62 US cents, or a 1.6% drop over the Friday night session. There was another peek just below 0.62 before support kicked in at that level. NZD/AUD pair continued to push lower, to just over 0.9250. The Kiwi was weaker on all the other key crosses, NZD/GBP at 0.50, NZD/EUR at 0.5650, and NZD/JPY at just over 83. On the New Zealand (NZ) data front last week the Business PMIS came at 48.1, below the prior’s month 51.7.
On the economic calendar and a very quiet week ahead in New Zealand. On Monday we will see the Business Performance of Services Index a survey of purchasing managers that asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. Statistics New Zealand will also release Food Price Index (FPI). Although food is among the most volatile consumer price components, this indicator garners some attention because New Zealand's major inflation data is released every quarter. However, all eyes this week will be on Thursday's Consumer Price Index (CPI) with estimates of 1.8% on QoQ Q1 inflation, while YoY is expected to remain at 7.2%.

Key Movers

On Friday there was a strong market reaction to US data releases, in particular retail sales. The headline figure fell by a greater than expected 1.0% in March adding to the 0.2% fall in February (slightly revised higher). Industrial production was stronger than expected at 0.4% m/m for March, but again weather-related effects inflated utility production, and manufacturing production contracted by 0.5%. Consumer sentiment rose 1½ points to 63.5, stronger than expected and sentiment showed no ill effects from the banking sector turmoil or a bounce-back in gas prices.
In the UK over the weekend the Bank of England is considering raising the amount of savers’ money that is guaranteed if their bank goes bust, after a crisis of confidence that led to the failures of Silicon Valley Bank and Credit Suisse last month. UK banks guarantee up to £85,000 of a saver’s funds in any single account, through a government-sanctioned but bank-funded pool of cash. However, that figure is less than half of the $250,000 (£200,000) that is guaranteed under US rules and is lower than the EU’s guarantee that covers up to € 100,000 worth of deposits. The GBP/USD pair edged lower on Friday but remained close to a 10-month high and had been supported by an improving appetite for risk. GBP/USD ended 0.88% lower and fell from a high of 1.2546 to a low of 1.2398. It will be a big week of British data that could provide clues on the outlook for monetary policy.

Expected Ranges

  • NZD/USD: 0.6100 - 0.6300 ▼
  • NZD/EUR: 0.5550 - 0.5750 ▼
  • GBP/NZD: 1.9900 - 2.0100 ▲
  • NZD/AUD: 1.0700 - 1.0900 ▼
  • NZD/CAD: 0.8200 - 0.8400 ▼