Home Daily Commentaries Labour market strength helps drive up RBNZ rate expectations

Labour market strength helps drive up RBNZ rate expectations

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Thursday 8 February, 2024

Daily Currency Update

The New Zealand dollar crept higher through trade on Wednesday, edging above US$0.61 amid an extended USD softening. In the absence of major headline news flow and key macroeconomic data price action, major currency markets was somewhat subdued. The NZD continued recovering losses suffered in the wake of last weeks robust US labour market print climbing through US$0.61 to mark intraday highs at US$06123. Q4 labour market data was stronger than anticipated and above RBNZ projections, lifting expectations for a possible February rate hike, albeit only marginally. Near term yields rose, helping fuel the NZD uptick. With nothing on the domestic data docket the we look to China CPI and PPI data and US jobless claims for direction through trade on Thursday.

Key Movers

Price action across currency markets was subdued through trade on Wednesday with majors pitching between narrow support and resistance levels in the absence of any major headline data. The Great British Pound was the best performer following a stronger-than-anticipated surge in House prices. Sterling pushed through 1.26, marking intraday highs just short of 1.2640 while the euro bounced between 1.0750 and 1.0780, edging higher after ECB policymaker, Isabel Schnabel, proffered resistance to market calls for a near term rate cut. Markets have priced in 124 basis point reduction through the year, starting with a cut in April. In the US, Federal Reserve speakers offered no new insight, sticking to message and outlining a patient approach to monetary policy adjustments. US treasuries tracked a narrow range and the dollar moved within a skinny handle trading between 103.90 and 104.20.

Our attentions turn now to China inflation data and US jobless claims as the major items on the macroeconomic agenda through Thursday.

Expected Ranges

  • NZD/USD: 0.6050 - 0.6150 ▲
  • NZD/EUR: 0.5600 - 0.5700 ▲
  • GBP/NZD: 2.0600 - 2.0800 ▼
  • NZD/AUD: 0.9320 - 0.9420 ▲
  • NZD/CAD: 0.8180 - 0.8280 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.