New Zealand dollar rallies on USD weakness

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the greenback. The NZD ended the week just over 0.61. More hawkish Fed-speak kept upside pressure on US short-end rates, seeing the 2-year rate end the week at a fresh 15-year high and resulting in more yield curve inversion. US equities ended the week on a strong note, fueled by short-covering. This saw the NZD appreciate through 0.6150, having traded below 0.60 just 48 hours earlier. The overnight session saw some settling down in FX markets and the NZD closed the week just above 0.61, up nearly 1% for the day and relatively flat for the week overall.

Looking ahead this week and today we will see the release of the monthly Visitor Arrivals. Tourism plays an important role in the economy. About 7% of the population is employed by the tourism industry, and a sizable portion of the nation's GDP is indirectly related to tourism. On Tuesday we will see the release of the Food Price Index (FPI) which measures the change in the price of food and food services purchased by households. On Wednesday Statistics New Zealand will release the latest Current Account which is directly linked to currency demand. A rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country. On Thursday all eyes will be on the release of New Zealand's quarterly Gross Domestic Product (GDP) which is the broadest measure of economic activity and the primary gauge of the economy's health.