NZD unable to hold post-CPI bounce in face of USD rebound
Daily Currency Update
The New Zealand dollar tracked lower through trade on Wednesday, unable to sustain a post-CPI move above US$0.63 amid a broad-based US dollar rebound. A higher-than-anticipated domestic inflation report saw the NZD jump back through US$0.63, marking intraday highs at US$.6310 before retreating quickly back toward US$0.6250/60. While higher than market estimates the upward surprise in CPI inflation was in line with RBNZ estimates and is unlikely to alter projections that the OCR has already reached its peak in this tightening cycle. The NZD remained under pressure through the overnight session, touching lows near US$0.6230 before finding support.With no domestic data on hand, we look to US unemployment claims and mid-tier macro data for direction on the day.
Key Movers
The US dollar continued to make broad-based gains against major counterparts as markets sought to restore oversold conditions and consolidate positions. The DXY index jump half a per cent through trade on Wednesday as the GBP underperformed and the Euro gave up 1.12. The Great British Pound slipped back below 1.30 following a softer-than-anticipated UK CPI report. Both headline and core CPI printed below expectations for June, marking the first surprise to the downside in 5 months. Market estimates were way off with headline CPI falling almost a full percentage point to 7.9%, down from 8.7%. The sharp decline in inflation pressure (while still much too high) helped ease pressure on interest rates and allowed investors to scale back expectations for the Bank of England’s peak terminal rate. With rates and gilt yields moving lower, the GBP crumbled to intraday lows at 1.2875 before finding support and rebounding back toward 1.2950 leading into this morning’s open.Our attentions now turn to US unemployment claims and mid-tier macro data for direction on the day.
Expected Ranges
- NZD/USD: 0.6200 - 0.6350 ▼
- NZD/EUR: 0.5550 - 0.5650 ▼
- GBP/NZD: 2.0480 - 2.0830 ▼
- NZD/AUD: 0.9180 - 0.9320 ▲
- NZD/CAD: 0.8180 - 0.8320 ▼