New Zealand dollar continues to trade above US$0.59
Daily Currency Update
The Kiwi dollar is steady this morning when valued against the Greenback. The NZD/USD pair is struggling to find firmer footing after slipping to the US$0.5900 level through Tuesday’s market session, dipping from the day’s high of US$0.5921 as the US dollar takes a step higher against the Kiwi. Kiwi bulls are struggling to lift the pair from the year’s lows near US$0.5860, and sustained selling pressure will send the NZD tumbling back to 2022’s lows near the US$0.5600 handle. Overseas visitor arrivals into New Zealand continued to rebound a year on from fully opening the border, according to data released by Stats NZ yesterday. There were 213,800 overseas visitor arrivals in July 2023, 84 percent of the level in July 2019. By comparison overseas visitor arrivals in July 2022 were 52 percent of the July 2019 level. In July 2023, the number of overseas visitor arrivals from India and the Philippines also exceeded their July 2019 level. Other traditionally significant sources of visitors, such as Australia, the United Kingdom, Korea, and Japan, ranged between 70 and 80 percent of their July 2019 level. China, the second largest source of overseas visitors pre-pandemic, was 56 percent of its July 2019 level.Looking ahead today we will see the release of the Food Price Index (FPI) for the month. Although food is among the most volatile consumer price components, this indicator garners some attention because New Zealand's major inflation data is released on a quarterly basis. Finally, on Friday we will see the release of the BusinessNZ Manufacturing Index which is a survey of manufacturers that asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.
Key Movers
The US dollar staged a mini comeback against the Japanese yen on Tuesday following hawkish remarks by the Bank of Japan (BoJ) Governor Kazuo Ueda over the weekend, as he spoke on the removal of negative interest rates. During the weekend, BoJ Governor Ueda said the bank could end its negative policy rate if inflation sustainably hits its 2% inflation target. JPY has been the weakest of the majors, perhaps a sign that the market had overreacted early in the week to BoJ Governor Ueda’s weekend comments. USD/JPY is trading back up through ¥147. The EUR and GBP have also lost a little ground against the USD over the past 24 hours.Looking ahead on the data front on the US front, the US Bureau of Labor Statistics (BLS) will release August’s inflation data on Wednesday. The Consumer Price Index (CPI) is expected to jump from 3.2% to 3.6% YoY, while core CPI to drop from 4.7% to 4.3%. A higher-than-expected inflation reading would reignite speculations about another rate hike by the US Federal Reserve. For the Fed’s upcoming meeting on September 21, money market futures expect no change to the Federal Fund Rates (FFR). For the November meeting, investors saw the FFR at around 5.48%, 15 bps above the effective FFR, as shown in the picture below.
Expected Ranges
- NZD/USD: 0.5800 - 0.6000 ▲
- NZD/EUR: 0.5380 - 0.5580 ▲
- GBP/NZD: 2.1040 - 2.1240 ▼
- NZD/AUD: 1.0770 - 1.0970 ▼
- NZD/CAD: 0.7900 - 0.8100 ▲