NZD claws back above US$0.61 amid softer US labour market data
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Daily Currency Update
The New Zealand dollar hit a fresh low for the week through trade on Thursday, slipping below US$0.61. The US dollar advanced in the wake of the Federal Open Market Committee rate statement and press conference after Chair Jerome Powell quashed hopes for a March rate cut. With investors forced to push back expectations for an easing in monetary policy, the NZD slipped below US$0.6085, marking intraday lows at US$0.6082 before finding support. Weaker than expected US jobless claims and weaker than expected labour costs helped underpin a growing narrative of labour market softness. With labour costs falling and wages beginning to retreat, inflation should continue to move substantially back toward target, again elevating hopes for looser monetary policy through Q3 and Q4. The weaker US data allowed the NZD to claw its way back above US$0.61 and opens this morning in much the same position in which it opened Thursday, just short of US$0.6150. Our attentions turn now to US non-farm payroll data this evening for direction into the weekly close.Key Movers
The USD outperformed through the Asian and European sessions before giving up gains through North American trade, after weaker than expected labour market data forced a correction in US treasury yields. The DXY index closed down on the day, giving up 0.24% as the GBP and euro found support. The Bank of England left its policy rate unchanged as expected but removed a bias to tightening from the accompanying policy statement. The move to a neutral policy stance came despite division within the MPC. Of the nine voting members, two pushed for another 25-point rate hike, one voted for a rate cut and six opted to hold. Governor Bailey acknowledged rate cuts will come, but doesn’t expect inflation to move below target until 2025. Market reaction was muted with little change in near-term rate cut expectations and markets looking to June as the first point for a rate adjustment. The GBP edged toward 1.2750, while the euro moved above 1.0850 and toward 1.0875. Our attentions turn now to US non-farm payroll data this evening for direction into the weekly close.Expected Ranges
- NZD/USD: 0.6080 - 0.6180 ▼
- NZD/EUR: 0.5620 - 0.5680 ▼
- GBP/NZD: 2.0600 - 2.0900 ▲
- NZD/AUD: 0.9280 - 0.9380 ▲
- NZD/CAD: 0.8180 - 0.8280 ▼