Daily Currency Update
The New Zealand dollar traded relatively flat throughout Thursday, edging marginally lower against the USD amid higher US treasury yields and hawkish Fed commentary. Having climbed through the local session, marking highs just north of US$0.6180 the NZD enjoyed more choppy price action through the overnight session as markets responded to improved US inflation metrics, a softening labour market, and hints from key Fed officials that suggest the tightening cycle may not be over. Having dipped below US$0.6150 the NZD found support comfortably above US$0.61 and opens this morning at US$0.6152. Having largely maintained momentum against the USD, the NZD is stronger against other majors, holding the post RBNZ gain against the AUD and advancing against both the euro and GBP. Our attentions turn now to commentary from Fed President Powell and US manufacturing data for direction into the weekend.
Key Movers
The US dollar made broad based gains on Thursday, as US treasury yields rose amid hawkish commentary from key Fed policy makers. While PCE inflation data fell to its lowest level in two years and jobless claims rose to their highest level since 2021, the USD found support in commentary from Fed members Daly and Williams. Both pushed back against the markets recent dovish interpretation on fed policy and expectation the Fed is done hiking and looking to cut rates through 2024. San Francisco Fed President Mary Daly said she is not contemplating rate cuts as it is way too early to even call an end to rate hikes, while Williams noted conditions are restrictive but must remain so for some time if inflation is to be brought back to target (2%). With US yields moving higher across the curve the dollar advanced, particularly against the euro and GBP. The euro gave up half a near 0.9% and slid back below 1.09 amid softer European inflation, while sterling fell below 1.27 and 1.2650 before finding support just above 1.26. As the US dollar looks to extend its recovery and trim losses suffered through November, our attentions turn to US Manufacturing data and Commentary from Fed President Jerome Powell for direction into the weekly close.
Expected Ranges
- NZD/USD: 0.6080 - 0.6180 ▼
- NZD/EUR: 0.5580 - 0.5680 ▲
- GBP/NZD: 2.0300 - 2.0600 ▼
- NZD/AUD: 0.9250 - 0.9350 ▲
- NZD/CAD: 0.8300 - 0.8400 ▼