Home Daily Commentaries New Zealand dollar trading below US$0.59

New Zealand dollar trading below US$0.59

Daily Currency Update

The New Zealand dollar is stronger this morning when valued against the Greenback currently trading at 0.5840 at time of writing. The NZD/USD pair extended its losses on Friday, declining by 0.54% to its lowest level since early November. The Kiwi pair remains on the backfoot as the US dollar (USD) performs strongly across the board on expectations that the Federal Reserve (Fed) will follow the interest rate cut path more gradually. The New Zealand dollar is forecast to weaken around 6% in the coming months as a slowing economy prompts investors to price in aggressive interest rate cuts from the nation’s central bank. New Zealand’s Reserve Bank could be on the cusp of becoming the most aggressive rate-cutting central bank if it slashes the cash rate by a massive 0.75 percentage points next week in response to a deteriorating economy. Financial markets imply a one-in-five chance of a super-sized cut to 4 per cent on November 27, the last policy meeting of 2024. They are fully priced for a half-a-point reduction which would bring it under the Australian rate for the first time since 2013, outside the pandemic in March 2020. Since August, the RBNZ eased policy by 75 basis points in just two meetings as the economy shrank and its gross domestic product per capita, a broad measure of living standards, fell for the seventh quarter in a row.

Key Movers

In Friday's session, the US dollar Index (DXY) declined slightly after reaching a new two-year high amidst geopolitical instability. However, strong S&P PMI data reinforced the US economy's relative resilience, supporting the DXY's gains. Consequently, the DXY retraced from above 108.00, stabilizing around 107.50. US stocks closed near session highs on Friday as investors surveyed President-elect Donald Trump's efforts to build his team and bitcoin's (BTC-USD) bid to reach a key milestone. The S&P 500 advanced 0.3%, while the Dow Jones Industrial Average gained over 400 points, or almost 1%, to close at a record. The tech-heavy Nasdaq Composite rose 0.2%. Next Thursday, the stock market will be closed due to the Thanksgiving holiday. Gold price rallies to a new two-week high on Friday during the North American session as US Treasury bond yields drop. The XAU/USD trades at $2,710, gaining 1.50%. Key economic indicators, including the Federal Reserve's meeting minutes, October Durable Goods Orders, and the Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, are set for release next week.

Expected Ranges

  • NZD/USD: 0.5700 - 0.5900 ▼
  • NZD/EUR: 0.5450 - 0.5650 ▼
  • GBP/NZD: 2.1250 - 2.1450 ▲
  • NZD/AUD: 1.1000 - 1.1200 ▼
  • NZD/CAD: 0.8000 - 0.8200 ▲

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.