Home Daily Commentaries New Zealand dollar finds support at 62 US cents

New Zealand dollar finds support at 62 US cents

Friday 24 February, 2023

Daily Currency Update

The Kiwi dollar is slightly weaker this morning when valued against the Greenback, trading at US$0.6224 at the time of writing. The Kiwi dollar continues to find support ahead of a technically significant 200-day Simple Moving Average (SMA) and attracts some buyers in the vicinity of the US$0.6200 mark on Thursday. The NZD/USD pair sticks to its modest intraday gains through the early European session, albeit lacking bullish conviction and struggling to capitalise on the move beyond the 0.6250 level. Despite local headwinds from severe flooding and a cyclone, the Reserve Bank of New Zealand (RBNZ) raised the official cash rate (OCR) target by 50bps on Wednesday. Adding to this, RBNZ Governor Adrian Orr said that core inflation is too high and that expectations are elevated. This in turn lifts bets for further policy tightening by the central bank and underpins the New Zealand dollar.

There are no scheduled releases today. Looking ahead next week and on Monday, Statistics New Zealand will release key quarterly Retail Sales figures, which is the primary gauge of consumer spending accounting for the majority of overall economic activity. On Tuesday we will see the release of the ANZ Business Confidence, a survey of about 1,500-2,000 businesses which asks respondents to rate the relative 12-month economic outlook. Finally on Wednesday we will see the release of monthly Building Consents, a leading gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building. Construction is important because it produces a wide-reaching ripple effect.

Key Movers

The US dollar strengthened after the release of the latest meeting minutes. The first Federal Open Market Committee's (FOMC) Minutes of 2023 has been released with investors searching for further insights into the near-term path for policy, and any comments regarding the possibility of the Federal Reserve going back to 50bps hikes. Key notes from FOMC minutes showed a few participants favoured raising rates by 50 basis points and all participants agreed more rate hikes needed to achieve FOMC's inflation objectives. US equities initially held up, but then extended the past week’s downtrend. The S&P500 currently sits down around 0.3%, with materials and consumer discretionary sectors among the laggards.

Data from the United States (US) portrayed the tightness of the labor market after the Department of Labor (DoL) revealed Initial Jobless Claims for the week ending on February 18. The claims rose by 192K, below the 200K estimated and beneath last week’s 194K. In a separate report, the US Department of Commerce (DoC) featured the US Gross Domestic Product (GDP) for Q4, which on its second estimate came at 2.7%, below the prior’s reading of 2.9%.

Expected Ranges

  • NZD/USD: 0.6150 - 0.6350 ▼
  • NZD/EUR: 0.5750 - 0.5950 ▼
  • GBP/NZD: 1.9200 - 1.9400 ▲
  • NZD/AUD: 1.0850 - 1.1050 ▲
  • NZD/CAD: 0.8350 - 0.8550 ▼