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NZD/USD under pressure below 0.64

Monday 9 May, 2022

Daily Currency Update

The New Zealand dollar continued its downward trajectory on Friday, falling 0.4% to open this morning at 0.6395, not too far away from a fresh two-year low. It was again concerns over the global growth outlook and expectations of aggressive Fed tightening that has undermined support for commodity currencies such as the Kiwi. Starting locally, the Kiwi first looked across the Tasman to the RBA’s Monetary Policy Statement. The RBA revised down growth forecasts and expects a 1.75% cash rate in 2022 amidst a sharp rise in inflation, a ‘stagflation’ scenario for New Zealand’s second-largest trading partner. New Zealand’s largest trading partner, China, also shows signs of growth concerns as Shanghai’s lockdown continues into May and reports are that there are even stricter restrictions being placed on the city. Adding fuel to the fire is a general risk-off tone permeating markets with the S&P500 falling 0.6% and the Nasdaq falling 1.4%. Overall, risk-off sentiment amidst global growth concerns drove the Kiwi's movements further into the red on Friday. Moving into Monday, the Kiwi is set to enjoy a quiet day on the economic calendar but will certainly tune in for China’s Trade Balance announcement later today.

Key Movers

The US dollar touched a fresh 20-year high on Friday before tempering gains to only record a 0.05% uplift to 103.71. Nevertheless, it was a strong showing for the US dollar which continues to be aided by risk-off sentiment as well as expectations of aggressive Fed tightening. The greenback led the way on Friday as Non-Farm Payroll and the Unemployment Rate were released with few changes. The NFP report recorded a 428k increase in jobs in April, a touch higher than the markets expected 380k while the unemployment rate continued to hold steady at 3.6% despite expectations that it would drop to 3.45%. Nevertheless, the US labour market continues to be extremely tight and it will be unlikely to upset the Fed’s expected 50BP rate hike next month which kept the greenback well supported.

Expected Ranges

  • NZD/USD: 0.6355 - 0.6432 ▼
  • NZD/EUR: 0.6032 - 0.6105 ▼
  • GBP/NZD: 1.9168 - 1.9397 ▲
  • NZD/AUD: 0.9016 - 0.9125 ▼
  • NZD/CAD: 0.8210 - 0.8309 ▼