NZD outperforms following much weaker than expected US data set

Daily Currency Update

The New Zealand dollar was the strongest performed Tuesday lurching upward following softer-than-expected US data releases. The NZD tested last week's low of US$5890 early before much weaker than anticipated US labour market and consumer sentiment reports spurred a run on the USD. The US JOLTS report showed new job openings plunged to the lowest level in two years, a definitive retracement and confirmation the downward trend of the last few months is gathering momentum. A softening in the labour market is key to the Fed achieving its inflation goals. As the labour market shows signs of weakness consumer confidence typically falters, as was the case Tuesday. The Conference Board’s consumer sentiment report showed a decline in consumer comfort, weighing on consumption and growth expectations leading into Q4. The two softer prints drove down US treasury yields and the USD propelling the NZD toward intraday highs at US$0.5980. While stopping short of a break back above US$0.60 the NZD found added support in a stronger Chinese yuan. More reports of incremental change in Chinese stimulus plans helped anchor technical supports on moves below US$0.59.
Having enjoyed strong gains against the USD the NZD is also stronger against the GBP, AUD and CAD as our attentions turn to the Australian and German inflation data and the US ADP payroll data as key markers for direction.