NZD climbs back above US$0.63 amid US dollar correction
Wednesday 8 February, 2023
Daily Currency UpdateThe New Zealand dollar clawed its way upward through trade on Tuesday, pushing back above US$0.63 amid a broader US dollar downturn. Fears the US federal reserve would double down on its hawkish rhetoric and quicken the pace of rate hikes following last week's robust payroll and services prints drove the NZD toward intraday lows at US$0.6280 before fears were washed as Fed Chair Jerome Powell hit the wires. Powell addressed markets for the first time since Friday's shock macroeconomic update yet offered little to indicate a change in the Fed’s position. Powell reiterated the Fed’s belief the disinflationary process has begun, yet reminded investors there was still a way to go. The NZD climbed back above US$0.6350 as Powell spoke touching intraday highs at US$0.6360 before consolidating marginally lower and opening this morning at US$0.6320. With little of note on today’s macro ticket, we anticipate ongoing volatility as investors look to find their footing and reposition rate expectations.
Key MoversThe Japanese yen was the best-performing major unit overnight, following stronger-than-anticipated wage growth. Data showed wages have advanced near 5% year on year, bolstered by winter bonuses and a broader response to inflationary pressures. With markets looking to the Bank of Japan's expectations policy makers will be forced to amend the current policy framework lifted helping the JPY push back against recent US dollar gains. Having advanced 1.5% the yen touched intraday highs at ¥130.50 before correcting lower into this morning’s open. In other news, the US dollar tracked lower on the day following commentary from Fed Chair Jerome Powell. Markets were keenly attuned to Powell’s address, the first since Friday’s payroll and service data shock. Fears the Fed may again adopt an aggressive tone in tackling inflationary pressures eased as Powell simply reiterated his post-Federal Open Market Committee meeting message. While there is still a long way to go the inflation, pressures are easing with future interest rate adjustments dependent on incoming data. With the US dollar tracking lower the euro clawed its way back above US$1.07 while the GBP pushed off intraday lows south of US$1.1975 to trade back above US$1.20. With little of note on today’s macroeconomic ticket, we anticipate markets will continue to re-adjust policy expectations and positions in the wake of last week's blockbuster data dump.
- NZD/USD: 0.6270 - 0.6380 ▲
- NZD/EUR: 0.5850 - 0.5920 ▲
- GBP/NZD: 1.8920 - 1.9120 ▼
- NZD/AUD: 0.9050 - 0.9180 ▼
- NZD/CAD: 0.8420 - 0.8520 ▼