New Zealand dollar holds above US$0.62
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Daily Currency Update
The New Zealand dollar is slightly weaker this morning when valued against the Greenback currently trading at 0.6250 at time of writing. The Kiwi dollar declined in Friday's session, retreating from recent highs. The technical indicators suggest a potential correction in the near term. The NZD/USD pair is facing supports at the 0.6230-0.6200 zone which could be used to consolidate in the coming sessions as a healthy correction is necessary before the next upward leg. A break below the 0.6200 support could flash an alarm but the outlook by now is bullish. Last week on the data front New Zealand's business confidence jumped in August to the highest level in a decade as forward-looking activity indicators rose strongly. The survey's headline measure showed a net 50.6% of respondents expected the economy to improve over the year ahead, versus a 27.1% optimism level in the previous poll in July. A net 37.1% of respondents expected their own businesses to grow in the next 12 months, a seven-year high, versus 16.3% last month. Looking ahead this week and on Tuesday Statistics New Zealand will release the latest Terms of Trade Index which calculates the volume of imports that can be purchased with an equal volume of exports. On Wednesday Australia and New Zealand Banking Group (ANZ) will release the latest monthly Commodity Price Index.Key Movers
Inflation edged higher in July, according to a measure favored by the Federal Reserve as the central bank prepares to enact its first interest rate reduction in more than four years. The Commerce Department reported Friday that the personal consumption expenditures price index rose 0.2% on the month and was up 2.5% from the same period a year ago, exactly in line with the Dow Jones consensus estimates. Excluding volatile food and energy prices, core PCE also increased 0.2% for the month but was up 2.6% from a year ago. The 12-month figure was slightly softer than the 2.7% estimate. The core PCE Price Index, which excludes volatile food and energy prices, has a significant impact on the market’s pricing of the Fed’s interest rates outlook. With increased confidence that inflation is on track to sustainably decline to the Fed’s target of 2%, officials are now worried about growing risks to US labor market strength. Currently, financial market participants expect that the Fed is almost certain to start reducing interest rates in September.Expected Ranges
- NZD/USD: 0.6150 - 0.6350 ▲
- NZD/EUR: 0.5550 - 0.5750 ▲
- GBP/NZD: 2.0900 - 2.1100 ▲
- NZD/AUD: 1.0700 - 1.0900 ▼
- NZD/CAD: 0.8350 - 0.8550 ▲