New Zealand dollar rallies towards US$0.62
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Daily Currency Update
The New Zealand dollar is slightly stronger this morning when valued against the Greenback currently trading at 0.6190 at the time of writing. The Kiwi dollar is driven by upbeat Caixin Manufacturing PMI data for May. The IHS Markit reported that factory activity in the world’s second-largest economy rose at a faster pace to 51.7 from the consensus of 51.5 and the prior reading of 51.4. This has improved global economic prospects. This has also improved the New Zealand Dollar’s appeal. The NZ economy is one of China's leading trading partners, and the latter’s strong economic outlook improves the Kiwi dollar’s prospects. The AUD/NZD echoed a bearish technical outlook on Monday, falling below key levels towards 1.0805 as markets await mid-tier data from both nations on a quiet economic schedule at the beginning of the week. Looking ahead on the data front this week and on Wednesday Statistics New Zealand will release the latest monthly Terms of Trade Index. On Thursday we will see the release of the monthly ANZ Commodity Prices which tends to have a muted impact because the tightly-correlated Australian commodity prices are usually released a few days earlier. Finally, on Friday we will see the release of the monthly Manufacturing Sales.Key Movers
In the US overnight business activity in the US manufacturing sector contracted at an accelerating pace in May, with the ISM Manufacturing PMI dropping to 48.7 from 49.2 in April. This reading came in below the market expectation of 49.6. The Employment Index of the PMI survey improved to 51.1 in May from 48.6 in April, while the New Orders Index slumped to 45.4 from 49.1. Finally, the Prices Paid Index, the inflation component, retreated to 57 from 60.9 in the same period. US Apr construction spending unexpectedly fell -0.1% m/m, weaker than expectations of +0.2% m/m. The markets are discounting the chances for a -25 bp rate cut at 1% for the June 11-12 FOMC meeting, 15% for the following meeting on July 30-31, and 51% for the meeting after that on Sep 17-18.In the Eurozone manufacturing PMI from Hamburg Commercial Bank (HCOB) grew to 47.3 in May, announced S&P Global on Monday. That was up from April's figure of 45.7 and just below the preliminary estimate of 47.4. The PMI figure looks at five indices to measure economic health: new orders, output, employment, suppliers' delivery times, and stocks of purchases. The Manufacturing PMI Output Index, a separate figure that makes up the broader Manufacturing PMI, looks at the production output of the sector. This jumped to a 14-month high of 49.3 in May - below the preliminary reading of 49.6 but an increase on April's 47.3.
Expected Ranges
- NZD/USD: 0.6100 - 0.6300 ▲
- NZD/EUR: 0.5600 - 0.5800 ▲
- GBP/NZD: 2.0600 - 2.0800 ▼
- NZD/AUD: 1.0700 - 1.0900 ▼
- NZD/CAD: 0.8350 - 0.8550 ▲