New Zealand dollar falls below US$0.61 | OFX (2024)

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback currently trading at 0.6094 at time of writing. The Kiwi dollar moved higher to 0.6120 in Friday’s New York session. The Kiwi asset gains as the US dollar remains in the bearish trajectory due to strong expectations that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. The New Zealand dollar remains weak due to poor Business NZ PMI data for June. The PMI data came in at 41.1, contracted significantly from the prior release of 46.6. This has dampened the NZ economic outlook and has improved expectations of early rate cuts by the Reserve Bank of New Zealand (RBNZ). Looking ahead to the local data this week and today we will see the release of the BusinessNZ Services Index. A survey of purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. On Wednesday Statistics New Zealand will release the quarterly Consumer Price Index (CPI) which is expected to be down from 0.6% to 0.5% on the previous quarter. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. On Friday the Reserve Bank of New Zealand will release the latest Credit Card Spending which is correlated with consumer spending and confidence rising debt levels are a sign that lenders feel comfortable issuing loans, and that consumers are confident in their financial position and eager to spend money.

Key Movers

In the US on Friday the Producer Price Index (PPI) for final demand in the US rose 2.6% YoY in June, according to data published by the US Bureau of Labor Statistics. This result was higher than the forecasted 2.3%, surpassing the previous 2.2% rise in May. Core PPI also exceeded market expectations at 3%. However, sentiment data from the University of Michigan came in below expectation at 66.0, compared to the predicted 68.5 and the previous 68.2. This reflects increasing discouragement among US consumers about the economic outlook. In addition to subsiding inflation, the labor market is also losing steam. The unemployment rate climbed to a 2-1/2-year high of 4.1% in June. With the Federal Reserve now wary of labor-market weakness, economists and financial markets are increasingly betting on a rate cut in September, with another reduction in borrowing costs expected in December. The central bank has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range since last July. It has hiked its policy rate by 525 basis points since 2022. Wholesale goods prices dropped 0.5% last month after falling 0.8% in May, showing no impact from rising shipping costs. They were depressed by decreases in the prices of energy products, with gasoline declining 5.8% after dropping 7.3% in May. Food prices fell 0.3% after being unchanged in May. Egg prices, however, rebounded 55.9% after dropping 34.8% in May.

Expected Ranges

• NZD/USD: 0.6000 - 0.6200 ▼
• NZD/EUR: 0.5500 - 0.5700 ▼
• GBP/NZD: 2.1150 - 2.1350 ▲
• NZD/AUD: 1.1000 - 1.1200 ▼
• NZD/CAD: 0.8200 - 0.8400 ▲