- NZD/USD pulled higher, watching for RBNZ dovishness.
- Oil extended its gains to a high through $18 which dragged commodities higher.
- NZ unemployment will increase to 11% and GDP will be 8-10% lower this year.
NZD/USD is currently printing 0.6005 in a tight range between today’s low of 0.6002 and high of 0.6013. The Kiwi has bounced strongly overnight and i is questionable as to how sustainable the bid is in the bird.
“Decent bounce over the past 24 hours, breaking back above 0.60 again on poor US jobless data and NZ feel-good vibes, the latest being a potential common trans-Tasman border and helicopter money,” analysts at ANZ Bank argued. “Technically, price action looks stronger, but we wonder how sustainable it is given RBNZ dovishness and sentiment challenges facing the NZD should the risk-on environment we’re now in change, and with oil prices softer.”
Commodities bounce back
However, there was a respite from lower oil overnight. Oil extended its gains to a high through $18 which dragged commodities higher with the CRB index filling its wide bearish gap overnight. There are signs of further production cuts which has helped push crude oil prices higher. Also, we had news that Kuwait has already started cutting production ahead of the planned 1 May OPEC+ supply agreement and Algeria also told OPEC it would be cutting production immediately. Lastly, the weekly report fro the EIA, it shows that total production had fallen to 12.2mb/d, the lowest level in the weekly data series since July 2019 – US production is beginning to fall.
Meanwhile, for the kiwi, much depends on whether the RBNZ pares back the pace of QE next week. “We expect the weekly pace to slow to $1.2bn next week before settling at $1.05bn for the foreseeable future,” the analysts at ANZ said.
Even with all this stimulus, we expect unemployment will increase to 11% and GDP will be 8-10% lower this year.