Daily Currency Update
The New Zealand dollar offered little to excite investors tracking sideways in what was a largely uneventful trading session. Improved risk sentiment offset an extension in global rates and the NZD opens this morning little changed from this time yesterday. Having slipped below US$0.61 the NZD tracked off intraday lows at US$0.6095 and clawed its way back above US$0.61 late in the overnight session. After the marked correction through trade on Monday, Tuesday and Wednesday it seems markets were content in taking a beat to assess conditions and positions ahead of key central bank updates next week. Not only is the NZD under pressure against the USD, but it is among the worst performing majors for the week, down against most crosses. Our attentions turn now to Japan CPI, UK and Canadian Retail Sales data, and US consumer sentiment and inflation expectations data as key drivers shaping the implied monetary policy narrative.
Key Movers
Price action was markedly tamer through Thursday when compared with the volatility that enveloped markets through the early part of the week. The USD DXY is up one tenth of a percent, extending the 1.25 appreciation enjoyed since Friday. With global rates moving higher and US yields rising, the dollar continues to outpace most major counterparties. The euro was flat on the day while sterling crept marginally higher and the yen held firm. Higher global rates were offset by reports of peace talks between Israel and Hamas, and while tensions between Iran and Pakistan escalated, risk sentiment improved allowing global equities to edge upward, buoyed by an improved economic backdrop and tech outlook, driven by the world’s largest manufacturer of semiconductors, the Taiwan Semiconductor Manufacturing Co. While implied monetary policy expectations continue to drive direction, our attentions turn to Japan CPI, UK and Canadian Retail Sales data, and US consumer sentiment and inflation expectations data for guidance into the weekly close.
Expected Ranges
- NZD/USD: 0.6050 - 0.6180 ▼
- NZD/EUR: 0.5580 - 0.5650 ▼
- GBP/NZD: 2.0550 - 2.0850 ▲
- NZD/AUD: 0.9250 - 0.9350 ▼
- NZD/CAD: 0.8200 - 0.8300 ▼