Home Daily Commentaries New Zealand dollar trades above 61 US cents

New Zealand dollar trades above 61 US cents

Daily Currency Update

The Kiwi dollar is slightly stronger this morning when valued against the Greenback. The Kiwi dollar advances sharply on Friday following the release of mixed labor market data in the United States (US). At the time of writing, the NZD/USD has advanced 0.76% and trades at 0.6147. On the New Zealand front, the economic calendar featured Business PMI in New Zealand, which came at 52 above the previous month’s reading of 50.8, rising for two consecutive months after bottoming around 47.4 in November 2022. Manufacturing Sales in NZ plunged 9.9% YoY, its most significant decline since mid-2020.
Looking ahead this week and on Monday and Business NZ will release the Performance of Services Index a survey of purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. We will also see the release of the monthly Food Price Index (FPI) by Statistics New Zealand. On Tuesday we will see the release of monthly Visitor Arrivals. However, all eyes will be on Thursday's quarterly Gross Domestic Product (GDP) data. But the data may not necessarily have a sizeable impact on Reserve Bank of New Zealand (RBNZ) rate hike expectations unless there is a very big beat or miss. Although the RBNZ has not followed some of its peers in toning down its hawkish rhetoric, it has already been one of the most aggressive central banks over the past year and so there is limited scope for its terminal rate to go much higher.

Key Movers

In the US Banking regulators in California have taken over and closed the troubled tech lender Silicon Valley Bank, the biggest US bank failure since the global financial crisis. The California Department of Financial Protection and Innovation closed the bank on Friday and appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver. Shares of the bank were halted on Friday after they tumbled 66 per cent in pre-market trading. Silicon Valley Bank is the first FDIC-insured bank to fail in more than two years, the last being Almena State Bank in October 2020. Silicon Valley Bank's plight could lead to a loss of confidence, tougher US regulation and investor scepticism about the financial health of smaller US banks that were seen as adequately capitalised after regulators forced them to hold more capital in the aftermath of the 2008 crisis. The collapse of Lehman Brothers in 2008 sparked a worldwide credit crunch that contributed to the global financial crisis.
On the data front the US’s hiring boom continued in February with nonfarm payrolls adding another 311,000 jobs and the unemployment rate remains close to its 50-year low at 3.6%. The U.S. unemployment rate climbed from 3.4% to 3.6%, surprising market consensus that expected the rate to remain the same. The number of unemployed rose to 5.9 million in February. The number was sharply lower than the revised 504,000 new jobs the labor department announced were added in January, following months of slowed job growth. But it was far higher than the 220,000 economists had been expecting and come as inflation has remained stubbornly high. The Federal Reserve has signaled it will continue to aggressively hike interest rates in its fight to cool the economy and bring down prices. So far the Fed’s sharp rate rises do not appear to have filtered through to the jobs market.

Expected Ranges

  • NZD/USD: 0.6030 - 0.6230 ▲
  • NZD/EUR: 0.5630 - 0.5830 ▲
  • GBP/NZD: 1.9450 - 1.9650 ▲
  • NZD/AUD: 1.0600 - 1.0800 ▲
  • NZD/CAD: 0.8350 - 0.8550 ▼