New Zealand dollar falls below US$0.62
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Daily Currency Update
The New Zealand dollar is weaker this morning when valued against the Greenback, currently trading at US$0.6125 at the time of writing. The NZD/USD pair remained on the defensive during the early Asian session on Monday. The firmer Greenback after the encouraging US employment data exerts some selling pressure on the pair. More downside would appear if the NZD/USD pair breaks below the horizontal support plotted from the September 11 low around US$0.6100.We could see the NZ dollar decline further towards the May 3 high of US$0.6046 and the psychological support of US$0.6000 on September 11. On the local front, all eyes this week will be on the Reserve Bank of New Zealand (RBNZ), which is widely expected to deliver a 50 basis point interest rate cut amid concerns over weak economic growth and rising unemployment. Most analysts expect the RBNZ to lower its cash rate by 50 basis points in both October and November, revising their previous forecast of 25 basis point cuts for each month.
For the rest of the week, BusinessNZ will release the latest Performance of Manufacturing Index on Friday and Statistics New Zealand will release the latest monthly Food Price Index (FPI).
Key Movers
The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, witnessed a calm Monday session with mild losses, holding steady despite elevated levels near last week's highs. Key events this week to look out for is the release of the Federal Reserve's (Fed) Federal Open Market Committee (FOMC) Meeting Minutes and US Consumer Price Index (CPI) data. The probability now of a 50 bps cut in November or December is unlikely according to market investors which still anticipates 125 bps of total easing in the next 12 months.The Dow Jones Industrial Average fell 0.9%, while the S&P 500 and Nasdaq Composite shed 1% and 1.2%, respectively. The major indexes closed sharply higher on Friday after a better-than-expected September jobs report reinforced the idea that the U.S. economy is headed for a soft landing. The Dow finished last week at an all-time closing high, while the S&P 500 was just shy of a record of its own when trading kicked off this week.
The yield on 10-year Treasury's, which is sensitive to expectations around where interest rates are headed, moved above 4% on Monday for the first time in two months. The 10-year yield was at 4.02% recently, up from 3.98% on Friday. Gold futures were little changed at around $2,660, while bitcoin was up 1% around $63,300.
Expected Ranges
- NZD/USD: 0.6000 - 0.6200 ▼
- NZD/EUR: 0.5450 - 0.5650 ▼
- GBP/NZD: 2.1200 - 2.1400 ▲
- NZD/AUD: 1.0900 - 1.1100 ▼
- NZD/CAD: 0.8200 - 0.8400 ▼