Home Daily Commentaries New Zealand dollar remains steady at 62 US cents

New Zealand dollar remains steady at 62 US cents

Daily Currency Update

The Kiwi dollar is slightly weaker this morning when valued against the Greenback trading at US$0.6212 at time of writing. The Kiwi dollar has been trading more or less in a 0.6210-0.6250 trading range since the Reserve Bank of New Zealand’s monetary policy statement (MPS). Some NZD support is more evident in the crosses with NZD/AUD stronger at 0.9140.  EUR and GBP performances have also been lackluster, and NZD crosses against those are modestly higher, while NZD/JPY is flat around 84. Yesterday the Reserve Bank of New Zealand has increased the cash rate by 50 basis points to 4.75 per cent. New Zealand’s inflation now sits at 7.2 per cent and the country’s central bank acknowledged the impact Cyclone Gabrielle had had on its citizens in recent weeks. The RBNZ continues to expect the official cash rate (OCR) to peak at 5.5% in 2023, according to the monetary policy statement (MPS) accompanying the rate decision. That would mark the most aggressive policy tightening streak since the official cash rate was introduced in 1999.

Looking ahead today and Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr is due to testify on the Monetary Policy Statement before the Finance and Expenditure Committee, in Wellington. Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues. As head of the central bank, which controls short term interest rates, he has more influence over the nation's currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.

Key Movers

A solid majority of Federal Reserve officials agreed at their last policy meeting to slow the pace of increases in the U.S. central bank's benchmark overnight interest rate to a quarter of a percentage point, but also said the risks of high inflation remained a "key factor" shaping monetary policy and warranted continued hikes in borrowing costs until it was controlled. That was a moderation from their half-point hike in December after four consecutive jumbo-sized 75 basis-point increases. The action brought the Fed’s benchmark policy rate to a target range of 4.5% to 4.75%. Projections issued at the Fed’s December meeting showed officials saw rates rising slightly above 5% this year and staying there for a while to bring inflation down to the central bank’s 2% target. Investors previously doubted that message, and were pricing in rate cuts for the second half of this year.

Expected Ranges

  • NZD/USD: 0.6100 - 0.6300 ▼
  • NZD/EUR: 0.5750 - 0.5950 ▼
  • GBP/NZD: 1.9250 - 1.9450 ▲
  • NZD/AUD: 1.0850 - 1.1050 ▲
  • NZD/CAD: 0.8350 - 0.8550 ▲