Home Daily Commentaries New Zealand dollar rallies towards 63 US cents

New Zealand dollar rallies towards 63 US cents

Friday 29 July, 2022

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the Greenback. The Kiwi dollar has outperformed the other commodity currencies overnight and is slightly higher than where it was immediately after the Federal Reserve issued its FOMC statement, reaching a daily high of 0.6297. The NZD/USD pair is currently trading at around 0.6288. After hitting a 5-year low yesterday, the NZD/AUD cross is back above the 0.90 mark. The NZD/USD remains neutral-to-downward biased, despite jumping in two-volatile trading sessions, namely Wednesday and Thursday. A break of the resistance at 0.6305 is unlikely (there is another resistance at 0.6275). On the data front yesterday ANZ business survey for July painted an unsurprising picture of a struggling NZ economy, but still elevated inflationary pressures. Business activity remained at depressed levels (consistent with recessionary conditions, at face value), while residential investment intentions slumped to record lows, portending a major slowdown in building activity ahead. There are no scheduled releases in New Zealand today.

Key Movers

In the United States overnight US Q2 GDP growth came in weaker than the economist consensus, with the economy contracting at a 0.9% annualised rate in Q2 (+0.4% expected), the second straight quarter of negative growth. While the negative Q1 growth figure was largely due to a big hit from net exports, there were genuine signs of a slowdown in domestic activity in the Q2 numbers. Consumption slowed to a 1% annualised rate, while business investment was broadly flat and residential investment slumped 14% off the back of the slowing housing market. The two consecutive quarters of negative growth means the US now meets a common definition of a ‘technical recession’.  However, note that the US has its own recession dating committee (via the NBER), which looks at a broader range of indicators than just GDP. Looking ahead tonight in the US, the two key releases are the Employment Cost Index, the most comprehensive measure of US wage growth, and 5-10yr inflation expectations from the University of Michigan survey.  Inflation expectations unexpectedly fell to 2.8% in the preliminary survey release, but the results are sometimes revised when the final results come out.

Expected Ranges

  • NZD/USD: 0.6150 - 0.6350 ▲
  • NZD/EUR: 0.6050 - 0.6250 ▲
  • GBP/NZD: 1.9250 - 1.9450 ▲
  • NZD/AUD: 1.1000 - 1.1200 ▼
  • NZD/CAD: 0.7950 - 0.8150 ▲