New Zealand dollar trades below 63 US cents

Daily Currency Update

The Kiwi dollar is slightly weaker this morning when valued against the Greenback trading at 0.6228 at the time of writing. The Greenback followed the move in Treasury yields, trading at a fresh six-week high before reversing course. The Kiwi dollar briefly traded just below 0.62 US cents a key support level before rising through the US session and closing the week just under 0.6250, albeit down now for three weeks on the trot. From a technical perspective the NZD/USD pair’s sustained downside break of the previous support line from mid-November 2022, now resistance around 0.63 US cents. However, a daily closing below a 2.5-month-long support line, currently around 0.6220-15, becomes necessary for the bears to keep the reins, a break of which can highlight the 200-DMA of around 0.6175.
Looking to the week ahead and New Zealand's central bank will scale down its tightening campaign only slightly with a half-point interest rate hike to 4.75% on Wednesday as inflation is still running at a near three-decade high. That puts the Reserve Bank of New Zealand (RBNZ) one of the first among major central banks to start withdrawing pandemic-era stimulus, roughly in line with its peers, which are shifting to smaller rate increases after a historic rapid-fire series of moves. The RBNZ has already raised rates by a total of 400 basis points since October 2021. It will likely get to at least 500, with a peak of 5.25% or higher expected by mid-year by just over half of respondents, slightly below the RBNZ's own projected terminal rate of 5.50%. On Wednesday Statistics New Zealand will also release monthly trade balance figures. Export demand and currency demand are directly linked because foreigners must buy domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.