The New Zealand dollar, as we can see, has been in free fall for the last 40 days. This is due to weak demand for commodity risky assets, as well as the plans of the RBNZ to keep the rate of 5.5% unchanged in 2024. Perhaps other central banks will follow suit and take a break in the future, but for now we can see continued speculation on this topic, and in addition, the Fed has another increase in the reserve, which is likely to occur at the end of the year.
The rates have been consolidating this week as the US dollar has been weakened by disappointing macro reports. As it became known, the US economy began to experience problems in the labor market: there is a reduction in jobs and the number of vacancies, and the consumer confidence index fell immediately by 8 pips in August, although the opposite was expected. US GDP in the 2nd quarter, according to updated data, amounted to +2.1%, which is worse than expected.
The New Zealand dollar, also under pressure, failed to take advantage of the dollar's weakness as demand for commodities is questionable. The Chinese business activity report released yesterday is not inspiring as the index remained below 50 in August.
One of the most volatile weeks continues. The focus is on inflation reports in the US, on which a lot depends. Also very important is the index of business activity in the US, which, according to the ISM, is even lower than in China and forecast to be only 47 pips in August.
Looking at the chart, we can see a downtrend. The upward momentum that had been observed for 7 days was quickly lost. USD will not be difficult to beat the weak New Zealand currency in this confrontation. Although the rates are already close to historical lows, we see no other way but to reduce NZD/USD.
