New Zealand dollar trades above US$0.60
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Daily Currency Update
The New Zealand dollar is slightly stronger this morning when valued against the Greenback currently trading at 0.6038 at time of writing. The Kiwi dollar rallies in Friday’s European session as appeal for risky assets has improved. Market sentiment improves significantly as fears of the United States entering a recession have ebbed on upbeat Retail Sales for July and lower weekly Jobless Claims in the week ending August 9. However, the near-term appeal of the New Zealand dollar (NZD) remains uncertain as the Reserve Bank of New Zealand (RBNZ) unexpectedly reduced its Official Cash Rate (OCR) by 25 basis points (bps) to 5.25% on Wednesday. The move surprised economists polled by Reuters, who were expecting the central bank to hold rates unchanged at 5.5%. This is the first time the central bank has cut the official cash rate since March 2020. the RBNZ noted that consumer price inflation is returning to its target range of 1% to 3%. It said, “surveyed inflation expectations, firms’ pricing behavior, headline inflation, and a variety of core inflation measures are moving consistent with low and stable inflation.” While service inflation in the country is still elevated, the RBNZ expects it to decline, with consumer price inflation in New Zealand expected to remain near 2% “over the foreseeable future.” The RBNZ also lowered its benchmark rate forecast to 4.92% by December, implying that the central bank could cut rates again before the end of the year. Looking ahead this week and today Business NZ will release the latest Services Index report. On Tuesday Statistics New Zealand will release the latest Trade Balance figures for the month. Finally, on Friday we will see the latest quarterly Retail Sales figures.Key Movers
Last week in the United States retail sales accelerated in July by the most since early 2023 in a broad advance that points to a resilient consumer, even in the face of high prices and borrowing costs. The value of retail purchases, unadjusted for inflation, increased 1 per cent in July and helped by a sharp snapback in car sales, Commerce Department data showed Thursday. Excluding autos and gasoline stations, sales were up 0.4 per cent. The report showcases a consumer that’s holding up despite higher borrowing costs, a cooling labour market, and an uncertain economic outlook. On Thursday the number of Americans applying for unemployment benefits fell last week, another sign that the job market remains resilient in the face of high interest rates. Jobless claims dropped by 7,000 to 227,000 last week, the Labor Department reported Thursday. The four-week average of claims, which smooths out week-to-week ups and downs, fell by 4,500 to 236,500. In the week that ended Aug. 3, 1.86 million Americans were collecting jobless benefits, down by 7,000 from the week before. The Federal Reserve, fighting inflation that hit a four-decade just over two years ago, raised its benchmark interest rate 11 times in 2022 and 2023, taking it to a 23-year high. Inflation has come down steadily from 9.1% in June 2022 to a three-year low of 2.9% last month. Despite higher borrowing costs, the economy and hiring kept cruising along, defying widespread fears that the United States would sink into recession.Expected Ranges
- NZD/USD: 0.5950 - 0.6150 ▲
- NZD/EUR: 0.5350 - 0.5550 ▲
- GBP/NZD: 2.1200 - 2.1400 ▼
- NZD/AUD: 1.0900 - 1.1100 ▲
- NZD/CAD: 0.8150 - 0.8350 ▲