Home Daily Commentaries NZD underperforms as markets pare RBNZ rate cut bets

NZD underperforms as markets pare RBNZ rate cut bets

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Tuesday 5 March, 2024

Daily Currency Update

The New Zealand dollar tracked within a narrow range through trade on Monday amid a lack of headline newsflow and Tier 1 data. After testing 2024 lows in mid-February, the NZD has tracked within a well-confined handle through the last two weeks as investors pare expectations for a final RBNZ rate hike and push back the timing and trajectory of US rate cuts.

With the euro and GBP outperforming, the NZD tested lows nearing 0.48 against the GBP, while tracking back toward 0.9350 against the AUD. With no domestic data on hand today, we look to mid-level Japan inflation data and the latest Tokyo CPI update for direction through the local session.

US ISM services data dominates the overnight docket ahead of key central bank policy updates and non-farm payroll data Friday.

Key Movers

Despite an uptick across US treasury yields, there was little action across major currencies through trade on Monday. The DXY index traded sideways and has done so for the last 2 weeks as markets consolidate positions having pared back expectations for central bank policy change.

A string of stronger data sets in the US and across Europe have pushed back the timing and trajectory of rate cuts. With little headline data on hand to drive direction, the euro and GBP outperformed, advancing against their major counterparts. EUR/USD edged higher while EUR/JPY looks set to make a break back above 163.7, re-testing the 2024 high as investors unwind bets for a H1 ECB rate cut.

Another quiet macro docket suggests price action will again be well contained through Tuesday as we look to mid-level Japan inflation numbers and US services data for direction ahead of the ECB policy update Thursday and US non-farm payroll Friday.

Expected Ranges

  • NZD/USD: 0.6050 - 0.6150 ▼
  • NZD/EUR: 0.5580 - 0.5650 ▼
  • GBP/NZD: 2.0700 - 2.0900 ▲
  • NZD/AUD: 0.9320 - 0.9420 ▲
  • NZD/CAD: 0.8220 - 0.8320 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.