New Zealand dollar finds support above 60 US cents
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Daily Currency Update
The New Zealand dollar is slightly weaker this morning when valued against the Greenback, currently trading at US$0.6055 at time of writing. NZDUSD declined for the third consecutive day. The pair hit a two-month low of US$0.6039 after the latest data showed that inflation in New Zealand has slowed to its lowest level in over three years. New Zealand’s Q3 CPI rose 0.6% quarter-over-quarter (qoq), slightly below market expectations of 0.7% qoq. Annually, inflation slowed sharply from 3.3% year-over-year (yoy) to 2.2% yoy, in line with forecasts. This marks the first time since March 2021 that annual inflation has returned to within RBNZ’s target range of 1 to 3%. The result was also softer than RBNZ’s own forecast of 0.8% quarterly and 2.3% annual inflation. While there were some large quarter-to-quarter swings (in part related to policy changes), the broader trend in inflation is down. Inflation is set to track close to 2% over the coming year. We continue to expect a 50bp cut from the RBNZ at their 27 November meeting. The New Zealand dollar is likely to decline further; the major support at US$0.6005 is likely out of reach (there is another support at US$0.6030).Key Movers
The US dollar (USD) received support, bolstered by strong jobs reports and inflation data that have reduced expectations for aggressive easing by the Federal Reserve (Fed). As a result, markets are now forecasting a total of 125 basis points in rate cuts over the next year. The US economic calendar showed no highlights on Wednesday as markets wait for Thursday’s Retail Sales figures. US stocks popped on Wednesday, rebounding toward record highs, as investors digested a barrage of earnings results highlighted by Morgan Stanley. The Dow Jones Industrial Average (DJI) rose nearly 350 points, or about 0.8%, to close at a record high of 43,077.70. The tech-heavy Nasdaq Composite (IXIC) gained nearly 0.3%, while the benchmark S&P 500 (GSPC) was up around 0.5% and closed just shy of its own record. Gold prices rose during the mid-North American session on Wednesday, underpinned by the drop in US Treasury yields and the shrug off recent US dollar strength. Expectations that major central banks would cut rates amid soft inflation readings weighed on bond yields and boosted the non-yielding metal. At the time of writing, the XAUUSD trades at US$2,674, up by 0.46%.Expected Ranges
- NZD/USD: 0.5950 - 0.6150 ▲
- NZD/EUR: 0.5450 - 0.5650 ▲
- GBP/NZD: 2.1350 - 2.1550 ▲
- NZD/AUD: 1.0900 - 1.1100 ▲
- NZD/CAD: 0.8250 - 0.8450 ▲