NZD buoyed by uptick in industrial commodities and improved global growth outlook
Written by
Daily Currency Update
The NZD edged higher through trade on Tuesday, up 0.20% despite risk aversion across equity markets and an uptick in US treasury yields. An uptick in Key industrial commodity prices helped lift the NZD back above US$.5950, while a stronger-than-expected Global Dairy Trade Auction and a better-than-expected China Manufacturing print helped underpin gains. The GDT price index climbed nearly 3% with gains across all major products, led by whole milk powder up 3.4. With demand from Asia increasing and early signs of an improved global economic outlook emerging investors chased the NZD toward intraday highs at US$0.5969.Our attention now turns to local employment indicators for February. After January’s stronger-than-anticipated read another strong print could suggest an upside risk to employment growth affording the RBNZ scope to lift rates again if needed. Offshore China services data, European CPI inflation data and a US services report dominate the docket ahead of Friday’s all-important US non-farm payroll print.
Key Movers
Price action among major currencies was well contained through Tuesday. The USD DXY index fell despite an uptick in US treasury yields and increased risk aversion across equity markets while oil-led currencies found support amid an uptick in oil prices. The Norwegian Kroner (NOK) and Canadian dollar outperformed with the NOK up 1.1%, leading all majors. With the euro edging back above US$1.0750 and the pound over US$1.2650 our attention now turns to Eurozone inflation data US ISM services data and ADP employment date for direction through trade on Wednesday. We expect EX core CPI to edge lower to 3% allowing investors to firm bets on a June rate cut as inflation runs toward the European Central Bank's 2% target. A surprise upside print could disrupt this timeline and afford the euro near-term support. US services data is expected to improve while ADP payroll data is expected to show a further slowdown in labour market performance ahead of Friday’s payroll print. With markets torn between pricing 3 or 2 Fed rate cuts into the end of the year term inflation and employment data will prove key in shaping expectations.Expected Ranges
- NZD/USD: 0.5920 - 0.6020 ▲
- NZD/EUR: 0.5500 - 0.5600 ▲
- GBP/NZD: 2.0900 - 2.1200 ▼
- NZD/AUD: 0.9100 - 0.9200 ▼
- NZD/CAD: 0.8050 - 0.8150 ▲