Home Daily Commentaries NZD well contained as attentions turn to critical US employment update

NZD well contained as attentions turn to critical US employment update

Daily Currency Update

The New Zealand dollar tracked within a well contained range through Thursday, flat for the day as price action across major currency markets proved somewhat muted. Having crashed below US$0.61 on Wednesday, the NZD bounced between US$0.60665 and US$0.6095, unable to mount any meaningful rebound. With the RBNZ announcing an end to its tightening cycle, China showing ongoing signs of economic instability, and the Fed looking increasingly likely to cushion the landing of the US economy price action, demand for the NZD has cratered this week. Not only is the NZD lower against the USD but is also trading lower against most major crosses, giving up ground to the AUD, GBP, euro, and the yen.

With little of note on the domestic economic agenda, our attentions turn now to US non-farm payroll and employment data. With market expectations for a softened economic downturn elevated, another robust print will likely underpin the narrative, heaping more pressure on the NZD, while a surprise downturn in labour market activity could offer the beleaguered Kiwi a much-needed reprieve leading into the weekly close.

Key Movers

Price action across major currencies has been largely well contained as markets pare position leading into tonight’s all-important Non-Farm payroll print. There was little reaction to the Bank of England’s decision to raise its policy rate by 25 basis points. Markets had priced the move, along with expectations for further tightening as policy makers work to bring inflation back toward target and 2%. While the pound rallied following the MPC announcement, it succeeded only in recovering losses suffered earlier in the day and opens this morning flat. With the euro tracking between 1.0915 and 1.0960, the Japanese yen was the day’s top performer rebuking losses suffered in the wake of the BoJ bond buying intervention and forcing the USD back below 143 and 142.50. With the USD DXY index largely unchanged, our attentions turn now to tonight's US employment report. We anticipate unemployment will remain stable near 3.6% as strong employment growth continues to underpin a robust labour market. With wage inflation expected to ease, the Fed expectations the Fed can cushion a softer than anticipated economic landing could help drive the USD higher into the weekly close.

Expected Ranges

  • NZD/USD: 0.6020 - 0.6150 ▼
  • NZD/EUR: 0.5500 - 0.5600 ▼
  • GBP/NZD: 2.0800 - 2.0100 ▼
  • NZD/AUD: 0.9220 - 0.9320 ▼
  • NZD/CAD: 0.8080 - 0.8150 ▼