New Zealand Dollar hovers around 0.6000 on firmer US Dollar, eyes on Chinese data
- The New Zealand Dollar edges lower in Friday’s early Asian session.
- A fall in New Zealand’s two-year inflation expectations and a firmer US Dollar weigh on the pair.
- Traders await the Chinese CPI and PPI data, which are due on Friday.
The New Zealand Dollar (NZD) trades with a mild bearish bias on Friday amid renewed US Dollar (USD) demand. The Greenback advances to a weekly high as the recent US Initial Jobless Claims ease some fears about the US labor market. A fall in New Zealand's two-year inflation expectations might cap the upside for the NZD. Additionally, the heightened geopolitical risks in the Middle East could weigh on riskier assets like the Kiwi and create a headwind for NZD/USD.
On the other hand, a stronger-than-expected New Zealand employment report earlier this week threw cold water on expectations of the Reserve Bank of New Zealand (RBNZ) interest rate cut in the near term. The upbeat reading could be enough to spur another bullish run for the Kiwi in the near term. Traders will keep an eye on Chinese economic data on Friday, including Consumer Price Index (CPI) and Producer Price Index (PPI) for July. Any signs of recovery in the Chinese economy could lift the Kiwi as China is New Zealand's largest trading partner.
Daily Digest Market Movers: New Zealand Dollar loses traction amid stronger US Dollar
- According to RBNZ's latest monetary conditions survey, the two-year inflation expectations fell from 2.33% seen in Q2 2024 to 2.03% in Q3 of this year. The average one-year inflation expectations declined to 2.40% in Q3 versus 2.73% seen in Q2.
- The US Initial Jobless Claims for the week ending August 3 rose by 233K, compared to the previous week of 250K (revised from 249K), the US Department of Labor (DoL) reported on Thursday. This figure came in below the consensus of 240K.
- Continuing Claims increased by 6K to 1.875M in the week ended July 27, beating the estimation of 1.870M.
- Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee said on Thursday that the Fed needs to see more than payrolls and more than one month.
- Richmond Fed President Thomas Barkin noted that cooling in the US labor market is coming from slower hiring rather than a rise in layoffs, giving the Fed time to figure out itKansas City Fed President Jeffrey Schmid said on Thursday that lowering monetary policy would be "appropriate" should inflation continue to come in low, per Reuters.s next move.
Technical Analysis: New Zealand Dollar remains bearish in the longer term
The New Zealand Dollar trades stronger on the day. However, the bearish stance of the NZD/USD pair prevails on the daily chart, with the price remaining below the key 100-day Exponential Moving Average (EMA). Nonetheless, the RSI hovers around the 50-midline, suggesting a potential for consolidation cannot be ruled out.
The 100-period EMA near 0.6050 could act as a potential upside barrier for NZD/USD. If the price manages to break above this level, it would indicate the possibility of further upside. The next hurdle is seen at 0.6112, the upper boundary of the Bollinger Band.
On the downside, the initial support level emerges at 0.5912, a low of August 6. Further south, the additional downside filter to watch is the 0.5850-0.5840 region, representing a low of April 19 and the lower limit of the Bollinger Band.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the .
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.01% | 0.05% | 0.04% | 0.09% | -0.22% | 0.01% | -0.13% | |
| EUR | -0.01% | 0.03% | 0.02% | 0.07% | -0.23% | 0.01% | -0.13% | |
| GBP | -0.04% | -0.03% | -0.01% | 0.05% | -0.24% | -0.01% | -0.15% | |
| CAD | -0.04% | -0.03% | 0.01% | 0.05% | -0.23% | -0.01% | -0.15% | |
| AUD | -0.09% | -0.08% | -0.04% | -0.05% | -0.33% | -0.08% | -0.21% | |
| JPY | 0.18% | 0.23% | 0.23% | 0.21% | 0.27% | 0.25% | 0.12% | |
| NZD | -0.01% | 0.01% | 0.04% | 0.03% | 0.08% | -0.25% | -0.13% | |
| CHF | 0.12% | 0.13% | 0.16% | 0.14% | 0.19% | -0.12% | 0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.