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NZD gives back post RBNZ gains and finds support at 0.6450

Friday 27 May, 2022

Daily Currency Update

The New Zealand dollar edged lower through trade on Thursday, as markets continue to give back the gains won following the RBNZ’s hawkish policy update on Wednesday. Concern surrounding China’s growth outlook dampened demand for risk assets through the domestic session, as Beijing appears poised to enter extended lockdowns as new community transmitted cases emerge across the city. Investors amended expectations for Chinese GDP and forced the CNY lower, a move that spilled into commodity currencies and forced the NZD toward intraday lows at 0.6450. Having found support, the NZD tracked higher through the overnight session as stronger than anticipated US earnings across a number of retailers helped spur improved risk sentiment. US equities charged higher and while gains across currencies were modest, the NZD edged back toward 0.65 amid broader USD weakness. Our attentions turn now to domestic consumer confidence data ahead of key US growth markers for direction into the weekly close.

Key Movers

Price action across commodity currencies was largely muted through trade on Thursday, as a surge across US equities failed to spill into other financial assets. The USD edged lower against most counterparts, while the euro outpaced the competition, extending back above 1.07 to touch intraday highs at 1.0730. Markets continue to react to the ECB’s recent hawkish pivot, adjusting expectations for monetary policy change as we move toward H2. A slew of commentary from ECB officials suggest the bank is poised to move away from its negative rate setting and issue at least a 50-basis point adjustment leading into year end. Having touched intraday highs at 1.0730, the single currency tracked between 1.0710 and 1.0730 leading into this morning’s open. Our attentions today turn to key US growth markers and changing energy prices. Rising oil and natural gas prices remain a concern and will play a significant role in determining near term inflation outcomes. A sustained uptick in energy prices will all but guarantee price pressures across non-discretionary consumer items remain elevated.

Expected Ranges

  • NZD/USD: 0.6420 - 0.6520 ▼
  • NZD/EUR: 0.5980 - 0.6080 ▼
  • GBP/NZD: 1.9380 - 1.9520 ▲
  • NZD/AUD: 0.9080 - 0.9180 ▼
  • NZD/CAD: 0.8250 - 0.8350 ▼