Daily Currency Update
The New Zealand dollar tracked within a narrow range through trade on Wednesday, bouncing between US$0.6135 and US$0.6176 in what was a relatively quiet trading day. Weaker oil prices and softer US payroll data fostered an extension in the global bond market rally and a further sell-off across global rates with European and US rates both trending lower. The rates sell-off failed to spill into currencies and the NZD maintained a narrow range against most counterparts, finding some support against the AUD and pushing toward A$0.9375. With only second-tier macro data on hand today our attention turns to Friday’s all-important US Non-Farms payroll print. The softer-than-anticipated ADP payroll print may serve as a guide to broader labour market performance. Should wage inflation and jobs growth slow, the pressure on the Federal Reserve to call an end to the tightening cycle will grow, putting more downward pressure on US yields and fording the NZD an opportunity to push back above US$0.62. A stronger print will leave the prospect of a rate hike on the table and could see the NZD slip back toward US$0.61 and US$0.60.
Key Movers
Net moves across currency markets were muted through trade on Tuesday with most major tracking within a 0.2% range when valued back against the USD. Oil prices fell to their lowest level in 5 months, helping extend the global bond market rally, while driving global rates lower. The USD managed to retain gains won through Monday and Tuesday as the Euro consolidated a break below 1.08 and the GBP continued to trade below 1.26. German factory orders unexpectedly plummeted through October, down nearly 4% as a collapse in offshore orders comfortably countered an uptick in domestic activity. The surprise print points to the sluggish nature of the German economy and supports calls for easier European Central Bank (ECB) policy through 2024. With little headline data on hand today our attention turns to US non-farm payroll data Friday. ADP private payroll, although not the best market of full labour market performance, underperformed through November with private payrolls rising by just 103,000 well short of the 130,000 new jobs expected to be created, while wage inflation slowed, speaking to the broader softening in the labour market. If those numbers are mirrored in the more comprehensive non-farm payroll print the market will likely elevate calls for the Federal Reserve to end the tightening cycle and forecast easier policy through 2024.
Expected Ranges
- NZD/USD: 0.6080 - 0.6220 ▼
- NZD/EUR: 0.5650 - 0.5750 ▲
- GBP/NZD: 2.0300 - 2.0700 ▼
- NZD/AUD: 0.9300 - 0.9400 ▲
- NZD/CAD: 0.8300 - 0.8400 ▲