Kiwi dollar steady ahead of inflation report
Tuesday 6 August, 2019
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand dollar is slightly weaker this morning when valued against the Greenback, reaching an overnight low of 0.6488. The Kiwi fell on the back of growing concerns the US-China trade war and the devaluation of the Chinese yuan. China allowed the yuan to breach the 7 per dollar level for the first time in 11 years. New Zealand's economy enjoys a large agricultural trade with China, which has seen the Kiwi currency develop a correlation with the Chinese Yuan. Looking ahead today in New Zealand and the economic calendar is fairly full. All kicking off with the labour market data which is expected to show employment growth remaining soft and the unemployment rate ticking higher at 4.3%. We will also see the release of Wage Inflation is expected to pick up from the previous quarter. From a technical perspective, the NZD/USD pair is currently trading at 0.6525. We continue to expect support to hold on moves approaching 0.6480 while now any upward push will likely meet resistance around 0.6550.
Key MoversOn Monday we saw a U.S. dollar sell-off continue as risk-off took over financial markets after China allowed the yuan to breach the 7 per dollar level for the first time in 11 years, a level last seen in 2008, in move seen as a direct response to U.S. President Donald Trump’s escalation of their trade conflict through more tariffs. The move opens up a new front that could dramatically raise volatility in the forex market after a prolonged period of calm. On the data front yesterday US Markit indexes came in better-than-anticipated, but the official ISM Non-Manufacturing PMI dropped in July to 53.7 from 55.1 and below the expected 55.5. The backdrop in services output further weighed on the greenback. The Great British Pound hit a 23-month low vs. euro as a no-deal Brexit continues to grow. The pound was last down by 0.7% against the euro after falling as low as 92.04, the lowest it has been since early September 2017. On the data front yesterday in the we saw the release of UK Markit Services PMI, which resulted in July at 51.4, improving from the previous 50.2 and beating the market’s expectations. Looking ahead for the rest of this week in the UK and the macroeconomic calendar is quite full starting with the July Services PMI today and ending with second-quarter growth data on Friday. From a technical perspective, the GBP/USD pair is currently trading at 1.2142. We continue to expect support to hold on moves approaching 1.2120 while now any upward push will likely meet resistance around 1.2190.
- NZD/USD: 0.6500 - 0.6600 ▲
- NZD/AUD: 0.9600 - 0.9800 ▲
- GBP/NZD: 1.8400 - 1.8600 ▼
- NZD/EUR: 0.5800 - 0.5900 ▲
- NZD/CAD: 0.8625 - 0.8725 ▲