Daily Currency Update
The New Zealand dollar continued to move lower through trade on Tuesday, giving up last week's FOMC and Non-farm payroll gains as the USD seeks to unwind losses and the market adopts a more cautious approach amid softer China data. Chinese export data fell for a sixth consecutive month and while imports rose a backdrop of weak consumer and business sentiment highlights just how fragile the economic recovery is. Oil prices led losses among major commodities, while the NZD slid toward intraday lows only marginally above US$0.59, almost a full cent below Monday’s high above US$.60. While lower against the USD the NZD enjoyed extended gains against the AUD, pushing back above AU$0.92 to mark session highs above AU$0.9230 following the RBA policy announcement and statement. With little of note on the international docket the RBNZ’s survey of expectations is released today with a market focus squarely on the inflation component. After last month's softer-than-anticipated inflation update, RBNZ forecasts will be key in determining near-term monetary policy expectations.
Key Movers
The US dollar advanced through trade on Tuesday, partially unwinding last week’s losses, while a risk-off mood helped bolster demand for haven assets. Comments from Fed officials affirmed the FOMC’s commitment to bringing inflation back to the 2% target, maintaining the bank's tightening bias. While market pricing indicates there is less than a 10% chance of a December rate hike front-end US treasuries remained relatively stable. German industrial production fell for the fourth time in four months, while import and export data highlighted just how fragile the Chinese economic recovery is. With the euro sliding back below US$1.07 and the GBP giving up US$1.23, while the DXY index rallied. With little of note on today’s macroeconomic docket, our attentions remain affixed to central bank policy expectations. With the market seemingly unsure of whether it should follow through on pricing out further Fed rate hikes direction through the near term will depend on investors' level of conviction and guidance from key policy makers.
Expected Ranges
- NZD/USD: 0.5880 - 0.6000 ▼
- NZD/EUR: 0.5480 - 0.5580 ▼
- GBP/NZD: 2.0550 - 2.0950 ▲
- NZD/AUD: 0.9120 - 0.9280 ▲
- NZD/CAD: 0.8120 - 0.8220 ▼