Kiwi makes new 2023 low in choppy end to week
Daily Currency Update
The New Zealand dollar enjoyed a choppy finish to the trading week as markets reacted to commentary from key Central Bank officials. Fed Chair Jerome Powell’s address sparked volatility across FX markets with the NZD rallying initially, before giving up gains and closing marginally lower on the day. Having touched intraday highs at US$0.5940, the NZD reversed course, slipping below US$0.59 to mark fresh 2023 lows before finding support.The NZD opens this morning having edged back above US$0.59. With the CNY withstanding more weak domestic data releases last week the NZD sell-off found respite. Despite marking fresh year-to-date lows, the NZD tracked within a narrower trading range. Our attention this week turns to US non-farm payroll data and ongoing China updates as critical markers for direction.
Key Movers
Price Action across majors was choppy through Friday as markets responded to commentary from Central Bank figureheads at the Jackson Hole Symposium on Monetary Policy. In a much-anticipated address, Fed Chair Jerome Powell portrayed a cautiously optimistic rhetoric, affirming the FOMC’s commitment to bringing inflation back to target.Powell reminded markets a period of below-trend growth and a softening labour market will likely be the norm through the coming 12-18 months as price pressures move back toward 2%. The prospect of low growth and higher unemployment sent the USD lower initially before the promise of tighter monetary policy for longer helped lift US treasury yields and drag the USD back toward the daily open.
Having closed flat on the day, the USD closed the week higher, and the dollar index is now comfortably above key technical resistance levels and the 200-day moving average.
The euro gained little support despite ECB President Lagarde adopting a hawkish tone for her Jackson Hole address. Lagarde said the policymakers will set rates as high as required to control inflation. The euro closed the week near 1.08, while the GBP slid below 1.26 and was the week's worst performer. The yen remained under pressure amid a backdrop of higher rates. With the USD trading through 146.50, the yen is now at its lowest level since November.
With little of note on today’s ticket, our attention turns to US consumer confidence data Tuesday ahead of German CPI data and ADP payroll data Wednesday.
Expected Ranges
- NZD/USD: 0.5880 - 0.5950 ▼
- NZD/EUR: 0.5400 - 0.5500 ▼
- GBP/NZD: 2.1200 - 2.1400 ▼
- NZD/AUD: 0.9180 - 0.9300 ▼
- NZD/CAD: 0.7980 - 0.8080 ▼