Home Daily Commentaries New Zealand dollar continues to hold above 62 US cents

New Zealand dollar continues to hold above 62 US cents

Friday 22 July, 2022

Daily Currency Update

The New Zealand dollar is broadly unchanged over the past 24 hours, holding just above 62 US cents against the Greenback. On the data front yesterday we saw the release of NZ Trade Balance for June 2022 monthly values and compared with June 2021. As a result, Goods exports rose $457 million (7.7 percent) to $6.4 billion, while Goods imports rose $1.4 billion (25 percent) to $7.1 billion. Overall the monthly trade balance was a deficit of $701 million. The quarterly trade balance was a deficit of $2.4 billion. Looking ahead today and we will see the release of Reserve Bank of New Zealand Statement of Intent, which provides insights into the bank's strategic priorities for the next financial year. From a technical perspective, the NZD/USD pair opened around 0.6250. NZD/USD resistance levels would be 0.6272, followed by 0.6300, and 0.6314. On the flip side, the NZD/USD first support would be 0.6200. A break below will expose the Kiwi dollar at 0.6195, followed by 0.6100.

Key Movers

Overnight all eyes were on the European Central Bank (ECB) monetary policy decision. The ECB hiked rates by 50 bps larger than expected, the first hike in over a decade, taking the deposit rate back to 0% and ending its negative rate policy that has been in place since 2014.  The main issues that forced the ECB into taking more aggressive action were inflation and the ongoing crisis with Russia. Italian Prime Minister Mario Draghi effectively resigned, and elections will be held by the second half of September. Italian President Sergio Mattarella has dissolved the Italian parliament, opening the door for a snap election on September 25. Overnight the US 10-year rate still remains broadly contained within a 2.75%-3.25% trading range, with recession fears capping the upside and still-high inflation limiting the downside. On the data front, US Jobless claims ticked up to 251k, continuing their gradual trend up over recent months, to now their highest level since November.  While jobless claims can be distorted at this time of year by seasonal adjustment issues, the trend higher seems clear and is consistent with growing anecdotes of hiring freezes and layoffs at several multinational companies. Separately, the Philadelphia Fed business survey was much weaker than expected, with forward capex intentions falling to a 9-year low and prices paid hitting their lowest level since early last year.

Expected Ranges

  • NZD/USD: 0.6150 - 0.6350 ▲
  • NZD/EUR: 0.6000 - 0.6200 ▲
  • GBP/NZD: 1.9100 - 1.9300 ▼
  • NZD/AUD: 1.0950 - 1.1150 ▼
  • NZD/CAD: 0.7950 - 0.8150 ▲