NZD steady in face of unsteady risk demand
Wednesday 1 February, 2023
Daily Currency UpdateThe New Zealand dollar enjoyed mixed fortunes through trade on Tuesday, edging below supports through the domestic session before clawing back losses overnight. Risk appetite soured through the local session despite a rebound across Chinese PMI data sets. Softer-than-anticipated corporate earnings forced a correction across key equity indices spilling into currencies and forcing the NZD below US$0.6420. Having marked intraday lows at US$ 0.6414 the NZD set about recouping losses. Weaker than anticipated US employment costs and a decline in wage inflation boosted hopes the Fed has guided the economy through a peak in price pressures prompting markets to shift course and eye a future correction in monetary policy settings. Expectations the Fed may pause its tightening cycle helped elevate risk demand through the overnight session and allowed the ND to climb back through US$0.6450. Our attentions turn now to US ADP Non-farm employment data, manufacturing PMI and Job Openings while euro area CPI estimates and manufacturing PMI’s dominate the European docket. With critical central bank policy announcements due Thursday today’s data sets could prompt a last-minute change in expectations.
Key MoversPrice action across major currencies was mixed through trade on Tuesday with little net change in underlying rates as risk appetite continues to waiver. The US dollar edged lower on the day following a larger than anticipated decline in wage inflation. While still elevated at an annualised rate of 4% the decline is welcome news for the Fed working to control price pressures. With underlying inflation peaking and the labour market softening expectations the Fed may pause its rate tightening cycle in April continue to gather steam. After a brief downturn the euro moved to extend gains pushing above €1.0850 while the yen pushed the USD back below ¥130 amid a softer global rates backdrop. Our attentions turn now to a slew of manufacturing PMI data out of Europe and the US, while US ADP non-farm payroll numbers and job openings will provide a last minute health check on the labour market ahead of tonight’s all important Fed policy update.
- NZD/USD: 0.6380 - 0.6520 ▼
- NZD/EUR: 0.5920 - 0.5980 ▼
- GBP/NZD: 1.8880 - 1.9220 ▼
- NZD/AUD: 0.9120 - 0.9220 ▲
- NZD/CAD: 0.8550 - 0.8680 ▼