The New Zealand dollar is unchanged in Friday trade. In Friday’s European session, NZD/USD is trading at 0.6837.
NZ dollar enjoying rosy November
The New Zealand dollar has looked sharp in the month of November, posting gains of 3.4% during that time. On Thursday, profit-taking pressure resulted in the currency posting its first losing daily session this month. Still, the currency managed to post a monthly high of 0.6914 on Thursday, its highest level since March 1. The New Zealand dollar has run roughshod over its US counterpart, gaining 14.6% since April 1.
The New Zealand dollar’s rally has been impressive, but at the same time, much of the upswing must be attributed to broad weakness in the US dollar, rather than strength on the part of the kiwi. New Zealand reacted swiftly and has kept Covid-19 casualties to a minimum, but repeated lockdowns have caused a recession. As well, reduced global demand for New Zealand exports has dampened economic growth. The economy contracted by 12.2% in the second quarter and we won’t get a look at GDP for Q3 until mid-December.
Manufacturing, inflation slow in October
New Zealand ended the week with soft October numbers. The BusinessNZ Manufacturing Index slowed to 51.7, down from 54.0 beforehand. This reading indicated slight expansion, just above the neutral 50-level. On the inflation front, the Food Price Index came in at -0.7%, after a decline of 1.0% in September. Low inflation is a reflection of the weak economy, and the most recent CPI (quarterly) release showed an annual inflation rate of just 1.4%, in the year ending in September 2020.
- We find resistance at 0.6891, followed by resistance at 0.6943
- NZD/USD tested support at 0.6811 in the Asian session. Below, there is support at 0.6783
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