Daily Currency Update
The New Zealand dollar retreated through trade on Wednesday under the weight of a USD rebound. Having failed to extend beyond resistance at US$0.6060 the NZD weakened overnight as second tier US data spooked investors and forced a rally across US treasury yields with the dollar following suit. US jobless claims fell through last week, reversing a string of upward moves while inflation expectations data showed year on year inflation is expected rise, surprising investors. Treasury yields rallied following the data prints as markets remain hypersensitive to anything that might disrupt the Federal Reserve narrative. Having tested a move below US$0.60, the NZD opens this morning buying just under US$0.6020. Our attentions turn now to European and US PMI data as the only headline data sets left on the docket as we move toward the weekly close.
Key Movers
Higher US treasury yields helped the USD pare recent losses and propel the DXY index higher. The Dollar index advanced four tenths of a percent following a fall in jobless claims and an uptick in the University of Michigan’s inflation expectations report. With the USD on the front foot, the euro slipped back below 01.09 while Sterling gave up 1.25 and the USD pushed back above 149.50 against the yen as the higher rates backdrop put pressure on the yen. The outsized market response to second tier data shows just how sensitive the market is to anything that may impact the Fed monetary policy cycle. With markets closed for Thanksgiving today, our attentions turn to European PMI data and US PMMI data Friday for direction into the weekly close. Thin trading volumes could drive elevated volatility should data sets print significantly outside expectations.
Expected Ranges
- NZD/USD: 0.5920 - 0.6060 ▼
- NZD/EUR: 0.5480 - 0.5580 ▼
- GBP/NZD: 2.0600 - 2.0900 ▲
- NZD/AUD: 0.9150 - 0.9250 ▼
- NZD/CAD: 0.8200 - 0.8300 ▼