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Week Ahead: NZDUSD to set new 2023 low?

Week Ahead: NZDUSD to set new 2023 low?

Earlier this week, we featured the best-performing G10 currency (Swiss Franc) against the US dollar so far in 2023 in our Trade of the Week, published on Mondays.

Time to switch gears and look at the other end of the spectrum …

The New Zealand dollar is the second worst-performing G10 currency against the US dollar so far this year, with NZDUSD having shed 5.2% during the period.

NOTE: The Japanese Yen still stands as the worst-performing G10 currency versus the US dollar so far in 2023, with USDJPY having climbed by over 10% year-to-date.


Traders will be monitoring the Reserve Bank of New Zealand’s (RBNZ) upcoming policy decision, nestled within a week that also features these major economic data releases and events:

* No tier-1 data scheduled out of major economies on Monday, August 14

Tuesday, August 15

  • JPY: Japan 2Q GDP
  • AUD: RBA meeting minutes
  • CNH: China July industrial production, retail sales, unemployment
  • EUR: Germany/Eurozone August ZEW survey
  • GBP: UK June unemployment
  • USD: US July retail sales; speech by Federal Reserve Bank of Minneapolis President Neel Kashkari
  • CAD: Canada July CPI


Wednesday, August 16

  • CNH: China July new home prices
  • NZD: RBNZ rate decision
  • EUR: Eurozone 2Q GDP and employment data; June industrial production
  • GBP: UK July CPI
  • USD: FOMC meeting minutes; US July industrial production


Thursday, August 17

  • JPY: Japan July external trade
  • AUD: Australia July unemployment
  • NOK: Central Bank of Norway rate decision
  • EUR: Eurozone June trade balance
  • USD: US weekly initial jobless claims


Friday, August 18

  • JPY: Japan July CPI
  • EUR: Eurozone July CPI (final)
  • GBP: UK July retail sales



What to expect from the RBNZ?

The RBNZ is expected to maintain its Official Cash Rate at 5.5%.

Markets are also predicting a greater-than-even chance (59% odds) that the RBNZ is already finished with its rate hikes.

This antipodean central bank has already tightened by 525 basis points since its first hike in October 2021, as the RBNZ got a head start on the Fed and other major central bankers.

After all, New Zealand is in a technical recession!

Its GDP fell for two consecutive quarters, contracting by 0.1% quarter-on-quarter in 1Q23, following the 0.7% decline in 4Q22.

That suggests that the RBNZ can’t keep raising its benchmark interest rate any further for fear of incurring further damage on the economy.

To buffer the fact, just today (Friday, August 11th), it was announced that New Zealand’s food prices fell by 0.5% in July compared to June 2023. This is its first decline since February 2022!

And that’s dragging the Kiwi dollar lower, being the sole G10 currency to be losing against the US dollar today (Friday, August 11th) as of the time of writing, with NZDUSD testing support around the psychologically-important 0.6000 mark.


In short, the NZD is set to be weighed down by the thought of no further RBNZ rate hikes along with the dour economic outlook.



Over to the US Dollar side of NZDUSD …

Next week, the world’s largest economy is set to unveil the following:

  • Tuesday, August 15: July retail sales data
  • Wednesday, August 16: minutes from the FOMC’s previous meeting in July.

The US dollar’s resilience may be buffered by a higher-than-0.4% retail sales print, showing that spending by US consumers remain robust, as well as more hawkish cues out of the FOMC meeting minutes.

The weekly jobless claims data, due out every Thursday, as well the Fed speak due over the coming week, may trigger more volatility for USD pairs as well.


Potential USD scenarios:

  • Overall, the US dollar should remain supported if the economic data points to yet another Fed rate hike later this year, with such a notion potentially dragging NZDUSD lower.
  • On the other hand, the US dollar may finally wilt at the thought that peak US interest rates are already at hand, especially on signs of waning US economic momentum, which may offer some relief to the Kiwi.


The Bloomberg FX model now forecasts a 71% chance that NZDUSD will trade within the 0.5913 – 0.6119 range through next week.


From a technical perspective …

Here are some key levels to look out for on the NZDUSD price charts:



  • 0.59850: year-to-date low
  • 0.59728: 23.6% Fibonacci level from NZDUSD’s February 2021 – October 2022 plummet
  • 0.5913: lower bound of Bloomberg model forecasted range



  • 0.6050 – 0.6060: late-June/early-august cycle lows
  • 0.6119: upper bound of Bloomberg model forecasted range / resistance area for NZDUSD highs this week (August 7-11)


Brace for technical rebound!

NZDUSD’s 14-day relative strength index (RSI) is flirting with the 30 mark, which denotes oversold levels.

Further declines may then spur a technical rebound in the week ahead, as was the case on June 1st.




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