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NZD slides amid calls for one more US rate hike
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Daily Currency Update
The New Zealand dollar tracked lower through trade on Thursday, giving up gains hard won on Wednesday and slipping back below US$0.59. A risk off mood, higher US treasury yields, and hawkish Fed commentary forced the NZD to mark intraday lows at US$0.5898. Fed policy makers made it clear that interest rates will not change until the FOMC has achieved its goal of bringing inflation back to target at 2%. Stubbornly sticky inflation and US economic resilience may force Federal Open Market Committee members to raise rates one more time. The prospect of higher rates and a protracted timeline to rate cuts boosted the USD and continues to weigh on near-term NZD value. With nothing on the domestic docket to close out the week, our attentions turn to Japan CPI data and UK retail sales numbers for direction into the close.Key Movers
The US dollar is stronger this morning having reversed losses suffered through trade on Wednesday amid hawkish Fed commentary and a general risk-off tone. Yields pushed higher after NY Fed President and FOMC member Williams suggested another rate hike was not out of the question, stating “monetary policy is in a good place, I am in no hurry to cut interest rates and if the data are telling us that we need higher interest rates to bring inflation back to target then we obviously want to do that”. With USD again on the front foot the euro slid back below 1.0650, while sterling gave up 1.2450 and the yen again gave up 154.50 and appears poised to break through 155. US treasury Secretary Yellen and the Finance Ministers of Japan and Korea met to discuss the recent and sharp depreciation of the yen and the won, offering a joint statement acknowledging the US would not stand in the way of any official currency intervention. Upon release of the statement the yen tracked higher, but Treasury yields carried the day and the USD recovered losses and is back near 154.70 on open this morning.Our attentions turn now to Japanese CPI data and UK retail sales data as the only tier one data headlining an otherwise quiet macroeconomic calendar.
Expected Ranges
- NZD/USD: 0.5870 – 0.6000 ▼
- NZD/EUR: 0.5500 – 0.5600 ▼
- GBP/NZD: 2.0800 – 2.1200 ▲
- NZD/AUD: 0.9150 – 0.9250 ▲
- NZD/CAD: 0.8100 – 0.8200 ▼
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