- NZD/USD regains lost ground to reach the mid-range of 0.6900.
- The kiwi extends recovery favoured by a softer USD.
- NZD/USD is expected to keep advancing towards 0.7200.
The New Zealand dollar has appreciated against its US counterpart for the second consecutive day, returning above 0.6900, after bouncing up from five-week lows at 0.6860, to reach 0.6945 so far. In a bigger picture, however, the pair remains negative, set for its fourth consecutive weekly decline
The kiwi picks up with the US dollar on retreat
The NZD/USD has regained some ground over the last sessions, favored by a somewhat softer greenback. US Treasury yields, which had been boosting the recent USD rally have pulled back, with the benchmark 10-year note falling below 1.5% for the first time since Monday. Furthermore, the lack of progress on the US debt ceiling fight is raising concerns about the consequences of a government shutdown, adding negative pressure on the US dollar.
On the macroeconomic calendar, September’s US ISM Manufacturing PMI has beaten expectations, increasing to 61.1 in September from 59.9 in August. Beyond that, US consumer spending, a highly relevant contributor to US economic activity, increased 0.8% in August, against a market consensus of 0.6%. The dollar, however, has been practically unaffected.
NZD/USD expected to keep appreciating towards 0.7200 – CIBC
From a wider perspective, the FX Analysis team at CIBC expects the kiwi to remain appreciating, aiming for 0.7200: “Support for NZD/USD is seen firm down to 0.68 and we expect any weakness to be contained ahead of there (…) “There is a question of either a 25 or 50bps hike at the meeting on October 6th, though regardless, a hawkish message will prevail. We anticipate NZD/USD regaining ground, potentially toward 0.72.”