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Currency markets quiet as equities ignite

Daily Currency Update

The New Zealand dollar edged upward through trade on Thursday, yet failed to hold a break above US$0.62. Price action across currencies was muted when compared to the fireworks that lit up equity markets and treasuries on Thursday. With little domestic data on hand, the NZD pushed toward intraday highs near US$0.6220 in the early hours of overnight trade, buoyed by a risk on mood and softer dollar, before reversing course on the heels of stronger than expected US jobs data and more cautious commentary from Fed officials. The NZD slipped back below US$0.62, settling between US$0.6175 and US$0.6195 leading into this morning’s local open.

Our attentions turn now to domestic retails sales data, while commentary from Fed officials dominated the offshore ticket as we seek guidance and direction into the weekly close.

Key Movers

There has been plenty of action across financial markets through the last 24 hours with equities and treasury yields both marking 2024 highs. Such was the surge across equity markets that Japan’s Nikkei recorded its highest level since December 1989, while the S&P 500 jumped 1.8% and the Euro Stoxx 600 rose nearly 1%. Nvidia’s scorching hot earnings report drove gains across the tech sector and helped lift cyclical stocks. By comparison, price action across major currencies was dull, with little net movement between key majors. Markets pared back expected Fed rate cuts this year to 80 basis points, effectively matching the Fed’s view of three 25-point rate adjustments. Minutes from the Fed's last meeting affirmed the cautious approach officials have adopted in considering rate cuts. With US yields rising, the dollar found support, forcing the euro off highs above 1.0850 and back toward 1.0810, while the GBP traded as low as 1.2614, down off highs above 1.27 and the JPY gave up ground allowing the USD to push back above 150.50 for the first time since Wednesday last week.

With the global macroeconomic docket light on headline data points our attentions turn now to more commentary from key Fed officials for direction into the weekly close.

Expected Ranges

  • NZD/USD: 0.6150 - 0.6220 ▲
  • NZD/EUR: 0.5680 - 0.5750 ▲
  • GBP/NZD: 2.0200 - 2.0500 ▼
  • NZD/AUD: 0.9380 - 0.9480 ▲
  • NZD/CAD: 0.8300 - 0.8400 ▲

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.