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New Zealand Dollar dips as robust US sentiment, inflation data underpin US Dollar

  • NZD/USD trades around 0.5830 on Friday, down 0.15% on the day at the time of writing.
  • The University of Michigan's preliminary Consumer Sentiment Index rises to 48.9 in June, above market expectations.
  • Producer inflation data continues to support the US Dollar and expectations of a restrictive monetary policy for longer.

NZD/USD trades around 0.5830 on Friday at the time of writing, down 0.15% on the day as the US Dollar (USD) maintains a firm tone following a series of strong US economic releases.

US consumer sentiment improved slightly in June. The University of Michigan's preliminary Consumer Sentiment Index rose to 48.9 from 44.8 in May, beating the market consensus of 46. The Consumer Expectations Index increased to 49.3 from 44.1 previously, while one-year inflation expectations eased to 4.6% from 4.8%. Five-year inflation expectations also declined to 3.4% from 3.9%.

According to the University of Michigan, lower gasoline prices at the start of the month provided some relief to households. However, the institution noted that confidence remains historically weak, with consumers still concerned about elevated price levels and the risk of persistent inflation.

These figures add to Thursday’s stronger-than-expected Producer Price Index (PPI) report. The PPI accelerated to 6.5% YoY in May, its highest level since November 2022, while the monthly increase of 1.1% exceeded market expectations. The data reinforced expectations that the Federal Reserve (Fed) could keep monetary policy restrictive for longer.

John Ryding, Chief Economic Advisor at Brean Capital, said the producer inflation report strengthens the case for Federal Open Market Committee (FOMC) members who believe another rate hike may be needed later this year.

The US Dollar is also benefiting from ongoing geopolitical uncertainty. Discussions between the United States (US) and Iran are progressing toward the signing of a memorandum of understanding this weekend, but several key issues remain unresolved, including the Strait of Hormuz and Iran’s nuclear program. ING believes that risks to global energy supplies remain significant and could continue to support the Greenback ahead of next week’s Fed policy meeting.

On the New Zealand side, the New Zealand Dollar (NZD) remains supported by expectations of further monetary tightening from the Reserve Bank of New Zealand (RBNZ). Governor Anna Breman recently indicated that the policy rate could be increased sooner and by more than previously anticipated. However, the strength of the US Dollar following the latest US economic data is limiting the Kiwi’s recovery potential in the near term.

New Zealand Dollar Price Today

The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD0.10%0.14%0.19%0.12%0.15%0.23%0.33%
EUR-0.10%0.03%0.11%0.02%0.04%0.11%0.22%
GBP-0.14%-0.03%0.09%-0.01%-0.01%0.09%0.20%
JPY-0.19%-0.11%-0.09%-0.10%-0.07%0.02%0.11%
CAD-0.12%-0.02%0.00%0.10%0.02%0.10%0.21%
AUD-0.15%-0.04%0.00%0.07%-0.02%0.07%0.17%
NZD-0.23%-0.11%-0.09%-0.02%-0.10%-0.07%0.11%
CHF-0.33%-0.22%-0.20%-0.11%-0.21%-0.17%-0.11%

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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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