New Zealand dollar holds above 59 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 0.5926 at time of writing. The unceasing advance of the bears led to a further decline below the 0.5900 level, plummeting to the May lows around 0.5880 earlier in the session. The NZD is under noticeable pressure, with factors such as growing expectations for a Reserve Bank of New Zealand interest rate cut and dour sentiment towards China regularly cited for the declines. The yen is surging as investors anticipate a potential rate rise at the Bank of Japan (BoJ), which comes amidst talk of further currency intervention by the BoJ. Demand for the yen has also increased as investors bet on the prospect of interest rate cuts at the Federal Reserve. It's no coincidence that the surge in the yen corresponds with the dumping of the NZD, AUD, and other currencies. The carry trade sees investors borrow money where interest rates are low and invest where they are high. From a daily perspective, robust support is currently detected at the 0.5900 line, and further below that, at the May lows around 0.5880. Conversely, resistance is still seen at the former support level of 0.6000, followed by 0.6050.Key Movers
The Pound Sterling bounced back against its major peers in Wednesday’s New York session after an upbeat preliminary S&P Global/CIPS Purchasing Managers’ Index (PMI) data for July. British business activity picked up this month after a lull in the run-up to a July 4 election, bolstered by the fastest manufacturing growth in two years and the strongest inflow of new orders since April 2023, a major survey showed on Wednesday. The Composite PMI came in higher at 52.7 than estimates of 52.6 and the former release of 52.3 due to an increase in activities in the manufacturing as well as service sectors. The Manufacturing and Services PMI expanded to 51.8 and 52.4, respectively, outperforming their former releases. Although growth so far this year has exceeded most forecasters' expectations, Britain's economy has performed relatively poorly since the COVID-19 pandemic. In the wake of the PMI data, British government bond futures, pushing the yield spread between British and German government bonds to its widest since early July. The future output component jumped from 70.4 to 74.7 in July, its second-highest reading since February 2022, helped in part by the fastest growth in export orders since March 2023.Expected Ranges
- NZD/USD: 0.5800 - 0.6000 ▼
- NZD/EUR: 0.5350 - 0.5550 ▼
- GBP/NZD: 2.1650 - 2.1850 ▲
- NZD/AUD: 1.1000 - 1.1200 ▼
- NZD/CAD: 0.8050 - 0.8250 ▲