NZD/USD Slips from 0.7040 to 0.6825 last week, a drop by 3% as it reaches multi-month lows. NZ Dollar to US Dollar is at the levels last seen in November 2020.
NZ Dollar to US Dollar at Multi-Month Lows
NZD/USD is at a nine-month low as it moves lower for five consecutive trading days in mid-August.
NZ Dollar to US Dollar has critical support levels at $0.6740. It was a major resistance barrier until November 2020. On piercing through this resistance in November, the NZD/USD currency pair rose higher to 0.7300 levels in May 2021. But it is back at the 0.6725 levels again in August 2021.
New Zealand Manufacturing and Trade
Economic activities in New Zealand are on the increase.
New Zealand PPI Input quarter on quarter is at 3.0%, while previously it was 2.1%. The PPI index shows that the expected change in the price of raw materials is more than the forecast level. It indicates consumer inflation is creeping into the economy.
PPI Output quarter on quarter is at 2.6% when compared to the previous 1.2% in May. The output price index of goods produced within the country has risen. The economy shows improvement as the lockdown restrictions have come down and businesses concentrate on trading activities again. Consumer spending is significantly higher as people are willing to step out of their houses for purchasing and dining out.
Australia is the closest trading partner of New Zealand. The Single Economic Market committed between the two countries lowers costs for bilateral trade between them. New Zealand has trade agreements with other countries, like Malaysia, Hong Kong, Singapore, Thailand, and Korea. The disrupted supply chain has to reverse to pull back trade to pre-pandemic levels.
China is the largest trading partner of New Zealand. The FTA agreement signed between China and New Zealand shows improving trade between the two countries. The sudden slowdown in China has put the brakes on trade activities between them. Fresh food products are the largest export from New Zealand to China.
RBNZ Delays Raising Rates
On Wednesday, The RBNZ states that monetary rates will remain steady at 0.25%.
Interest rates are at a record low at 0.25% in New Zealand. RBNZ holds interest rates on lockdown fears. Officials claim that policy rate tightening will take place by the end of the year. The NZD/USD slips to a nine-month low as policymakers makee delays in rising interest rates, while experts predicted a rise in interest rates.
New Zealand central bank Governor Adrian Orr says housing prices inflation will moderate significantly in the days ahead. Analysts predict a hike in October, as the economy shows a moderate rebound. An expectation of around 85 bp may occur in May, say experts. It is below the 100 bp expectations.
Governor Orr says that the demand side shows improvement within the economy. The supply capacity has gone down due to disruptions in trading activities.
Delta Covid Fear Rises Again
Global concerns rise amid the Delta variant of the virus spreading across several countries. A national snap-lockdown announcement by Prime Minister Jacinda Ardern keeps officials wary of the virus infection.
The NZ Dollar to US Dollar is on a five-day losing streak last week, on covid fears, on the nationwide lockdown announced on Wednesday.
The NZ Dollar to US Dollar on the foreign currency exchange is under pressure on the delta variant. The vaccination rollout is proceeding slowly, with only 20% inoculated. The opposition accuses the government of failing to speed up the vaccination process.
US Dollar Rebounds Higher
The US Dollar Index is at 93.57 on the forex markets moving higher from the 92.850 zones. The US Dollar Index is at the 2021 high point. Steady yields have propelled the greenback upwards to the year highs.
Brent crude has gone up from $69.50 per barrel, while the US crude shows a mild rebound to $67 per barrel. If the US Dollar currency trading rises higher, the kiwi may test the 0.6740 levels again.
Expectations of the Fed tapering bond purchases by the end of the year are positive for the greenback. Price stability and employment are the main concerns of the Fed. The preference for the safe-haven asset is pushing the USD currency rate higher.
Aussie Dollar to US Dollar Breaches 0.72 Levels
The Aussie Dollar to US Dollar at $0.7261 in the foreign exchange market shows a steep fall from the 0.72 levels. It is moving towards psychological support at 0.71 levels in the forex market. The slowing growth in China has brought a huge negative impact on the Australian economy. The continuous lockdown in the Australian economy has hit the currency market.
One Singaporean Dollar to USD is at 0.7336. One Hong Kong Dollar is at 0.1283 in the foreign exchange market.
The Australian Dollar to the US Dollar is at 0.7116 in the forex markets. One US Dollar to AUD is currently trading at 1.40
One New Zealand Dollar to US Dollar is at 0.6835. One US Dollar to 1 NZD is currently trading at 1.46 in the forex.