Daily Currency Update
The Kiwi dollar is weaker this morning when valued against the Greenback. The Kiwi dollar's bearish momentum is struggling to find acceptance above the 0.6125/35 resistance area so far. New Zealand data released on Friday revealed that business activity deteriorated further in December, while visitor arrivals experienced a significant decline compared to the same time last year. New Zealand's Business NZ Performance of Manufacturing Index (PMI) contracted further to 43.1 in December, down from November's 46.7. Despite the decline, NZ PMI activity is still up from October's low of 42.9 but still represents the ninth consecutive month of contraction in manufacturing activity in New Zealand. The number of international visitors is rising but is still well below pre-pandemic levels. Stats NZ said 2.9 million visitors arrived in New Zealand in the year to November 2023, an enormous increase of 1.83 million compared to the previous year. The number of visitors from Australia more than doubled from 605,000 in 2022 to 1.27m in 2023. Stats NZ also compared arrivals for the month of November to the same periods in 2022 and 2019. In total, 303,400 visitors arrived in New Zealand last November, 70,700 more than in November 2022. But it was well below the November 2019 period in which the country welcomed 372,100 visitors. Looking ahead in New Zealand this week on the data front and all eyes will be on the Statistics New Zealand quarterly Consumer Price Index (CPI) release on Wednesday. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. The market is forecasting a lift of 0.5% down on the previous quarter's 1.8%.
Key Movers
The Greenback closed the week slightly stronger against a basket of currencies off the back of stronger than expected University of Michigan (UoM) data which is keeping the USD afloat, but steady dovish bets on the Federal Reserve (Fed) limit any upward potential. The US economy appears overheated although the chances of interest rate cuts in March and May lingers at around 50%. Thus, the Greenback remains in fluctuating currents, affected by both resilient economic performance and dovish bets on the Fed's next move. Fed officials have been pushing back against market expectations of an increased pace of rate cuts from the US central bank, and markets appear to finally be listening as US economic data continues to thump market forecasts, printing consistently higher and healthier than investors were hoping for as markets yearn for cheaper lending and borrowing costs. US Consumer Sentiment improved to its best reading since July of 2021 according to the University of Michigan’s consumer sentiment survey. The UoM’s 5-year Consumer Inflation Expectations Survey in January also declined to familiar lows at 2.8% from December’s 2.9%. The Standard & Poor’s drove to a new all-time high of $4,839.58 on Friday as equities broadly rallied as investors piled into future earnings bets on large-cap tech stocks, with chip-makers loosely associated with AI tech projects leading the charge.
Expected Ranges
- NZD/USD: 0.6000 - 0.6200 ▼
- NZD/EUR: 0.5500 - 0.5700 ▼
- GBP/NZD: 2.0520 - 2.0720 ▲
- NZD/AUD: 1.0600 - 1.0800 ▼
- NZD/CAD: 0.8060 - 0.8260 ▼