New Zealand dollar trades above US$0.59
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Daily Currency Update
The New Zealand dollar is slightly stronger this morning when valued against the Greenback currently trading at 0.5947 at the time of writing. The NZD/USD pair trades in a tight range near 0.5950 in Friday’s European session. The overall outlook of the New Zealand dollar (NZD) remains weak as investors become risk-averse amid fears of a slowdown in the US economy. Also, China’s vulnerable economic prospects have dampened investors’ risk appetite. Data released by China’s National Bureau of Statistics (NBS) showed Wednesday that the official Manufacturing Purchasing Managers' Index (PMI) declined to 49.4 in July, beating estimates of 49.3. The Non-Manufacturing PMI dipped to 50.2 in the same period vs. June’s 50.5 and the expected 50.2 figure. Looking ahead this week in New Zealand and today we will see the release of the monthly Australia and New Zealand Banking Group (ANZ) Commodity Prices. Q2 Employment and Labor Cost Index data will be published on Tuesday. The Employment data will influence market expectations for Reserve Bank of New Zealand (RBNZ) rate cuts this year. The jobless rate is expected to rise from 4.3% to 4.7%. Finally, on Thursday the Reserve Bank of New Zealand will release the quarterly Inflation Expectations survey which asks 100 consumers respondents where they expect prices to be 24 months in the future. Expectations of future inflation can manifest into real inflation, primarily because workers tend to push for higher wages when they believe prices will rise.Key Movers
On Friday Nonfarm Payrolls (NFP) in the US rose 114,000 in July, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 179,000 increase (revised from 206,000) recorded in June and fell short of the market expectation of 175,000. The US Unemployment Rate also ticked higher to 4.3%, the highest reading since November of 2021, while the U6 Underemployment Rate rose to 7.8% from 7.4% as employed people struggle to find jobs that provide enough hours. Average Hourly Earnings growth also eased to 0.2% MoM from the expected hold at 0.3%, with YoY wages growth cooling to 3.6% from the previous 3.8%. Stocks tumbled Friday after new government data showed a steep decline in hiring in July, spurring concerns that economic activity is slowing faster than economists expected. The blue-chip Dow Jones Industrial Average plunged more than 980 points, or 2.4%, in early trade before paring its losses to close down 611 points, or 1.5%, at 39,737. The broader S&P 500 sank 1.8% on the day, while the Nasdaq Composite slid 2.4%, fueled by disappointing quarterly earnings from bellwethers such as Amazon, Intel and Tesla. That dropped the tech-heavy index into "correction" territory, or when stocks slide at least 10% from their previous high.The GBP/USD pair recovers at a strong pace from an intraday low of 1.2707 above the round-level resistance of 1.2800 in Friday’s New York session. The Cable discovers strong buying interest on disappointing United States Nonfarm Payrolls (NFP) data for July. Last week the Bank of England cut interest rates for the first time since the start of the pandemic, providing some relief to households squeezed by the highest borrowing costs in 16 years. The decision takes the benchmark interest rate in the United Kingdom to five per cent from 5.25 per cent, where it had stood since September following the longest-running series of successive rate hikes in at least a century. The knife-edge decision saw five members of the Bank of England's monetary policy committee vote to reduce the rate, while four wanted to keep it on hold. The rate is still the highest it has been since April 2008.
Expected Ranges
- NZD/USD: 0.5850 - 0.6050 ▼
- NZD/EUR: 0.5350 - 0.5550 ▼
- GBP/NZD: 2.1350 - 2.1550 ▲
- NZD/AUD: 1.0800 - 1.1000 ▲
- NZD/CAD: 0.8150 - 0.8350 ▼