The US Dollar New Zealand Dollar exchange rate began the week on an unsure footing thanks to a strong consumer confidence indicator from New Zealand in the form of a surge in electronic card transactions.
Safe-haven demand also thrived within the markets, pushing up the US Dollar while weighing heavily on the ‘Kiwi’, resulting in the US Dollar New Zealand Dollar exchange rate seeing a high of 1.3849 before the end of yesterday’s session.
With safe-haven demand abating, the USD/NZD paring has now fallen significantly and is currently trading at 1.3681 after falling over 1%.
‘Greenback’ (USD) Fails to Find Favour on Reduced Safe-Haven Demand
Even the US Federal Reserve’s own Esther George’s comments yesterday regarding the Fed’s interest rates being too low were not enough to mitigate the current slump in safe-haven demand that is gutting the US Dollar across the board.
Last Friday’s non-farm payrolls report placed the US Dollar on the front-foot over the weekend as the 297,000 new jobs figure wiped the floor with the previous month’s measly 11,000. However, the average figures still lag painfully behind previous years.
A rallying of global equities and commodities gave riskier, more lucrative currencies such as the New Zealand Dollar and ‘Aussie’ a glut of support while investors shied away from the stable ‘Buck’. With the US Federal reserve looking unlikely to hike rates any times soon, there is slim chance the US Dollar will be able to garner a massive amount of support any time soon.
‘Kiwi’ (NZD) Thrives as Risk Aversion Falls on Rallying Stocks and Commodities
After last week’s disappointing dairy auction saw the US Dollar New Zealand Dollar exchange rate skyrocket, the pairing has been cooled by the release of fairly positive ‘Kiwi’ ecostats and a fall in safe-haven asset demand.
An early week electronic card sales report gave the New Zealand Dollar a welcome boost in a sign that consumer confidence is returning in the ‘Kiwi’ economy. Over 75% of transactions occurring in the verdant islands are completed by card so the report is a fair indicator of consumer will.
The New Zealand Dollar then fell rather drastically against the US Dollar from Monday night over into Tuesday’s session, however abating safe-haven appetite saw the pairing fall once again.
On the back of rallying commodities and increasing global equities, the highly lucrative NZD saw significant investor favour and the USD/NZD pairing dropped to 1.3690, just above yearly lows.
Forecast for USD/NZD Likely to Be Influenced More by Market Sentiment than Data Releases
There is a hoard of ecostats ready to be uncovered throughout the week for the US economy. The main releases to look out for will be Wednesday’s import price index and Friday’s advanced retail sales report, consumer price index and the University of Michigan’s (UoM) confidence survey.
Import prices are likely to be down in the June period as ‘Brexit’-based uncertainty kept the Pound low. As the US and UK are close trading partners, this is bound to have an effect.
The CPI is a measure of inflation that should keep the US Dollar steady if the report falls within targets. The advanced retail sales report and UoM confidence survey serve to shed a light on consumer attitudes and could give the ‘Buck’ a boost if they show consumers are able and willing to spend.
The only ecostat of note from New Zealand will be released late on Wednesday night – the Business NZ manufacturing performance index. Already the sector sits at a healthy 57.1 and the report will likely have little effect unless it shows manufacturing slipping into contraction.
It will be down to commodity prices and safe-haven appetite, or lack thereof, to move the US Dollar New Zealand Dollar exchange rate until the big data releases from the US have their impact.