Home Daily Commentaries NZD gives up gains as attentions turn to US inflation update

NZD gives up gains as attentions turn to US inflation update

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.

| Tuesday 12 March, 2024

Daily Currency Update

The New Zealand dollar fell through trade on Monday, forced off last week's high amid higher US treasury yields and a USD rebound. Markets appeared nervous ahead of tonight’s all-important US CPI inflation print, paring positions and pushing the NZD back toward US$0.6160. January CPI data surprised to the upside, triggering a surge in US yields as investors were forced to delay Fed rate cut expectations, driving the NZD toward lows near US$0.6050. With only second tier data on hand to drive direction through the domestic session our attentions are squarely affixed to US inflation data. We expect a headline inflation increase of 0.4% month on month and annual decline to 3.7%. A miss will likely add pressure to calls for the Fed to keep rates steady for longer, lifting US yields and driving the NZD lower, while a softer print could be a catalyst to propel the NZD back toward and through US$0.62.

Key Movers

Price action across majors was muted through Monday as investors chose to pare positions ahead of tonight’s all important US inflation update. After the surprise upside print in January investors pushed US yields higher on expectations price pressures may remain elevated. With markets pricing in a fed rate cut in June any deviation from median estimates will drive volatility and either extend last week's USD sell off or provide a catalyst for the USD to recover losses and stave off near term downside risks. With the USD finding support, the GBP underperformed, reversing Friday’s gain and sliding back to 1.28, while the euro gave up 1.0975, sliding back toward 1.09. The Japanese yen was the only major offering resistance on the day, up slightly amid speculation the BoJ is on the verge of a pivot in monetary policy. With GDP data revised up and out of contractionary territory the optic of a BoJ adjustment are now more palatable and may be the catalyst officials need to finally pull the trigger and move away from negative rates.

Expected Ranges

  • NZD/USD: 0.6080 - 0.6220 ▼
  • NZD/EUR: 0.5580 - 0.5680 ▼
  • GBP/NZD: 2.0600 - 2.0900 ▼
  • NZD/AUD: 0.9300 - 0.9400 ▲
  • NZD/CAD: 0.8280 - 0.8380 ▼

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.