Depreciating Chinese yuan weighs on NZD
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Daily Currency Update
The New Zealand dollar offered little to excite investors through trade on Thursday, tracking within a narrow range and failing to capitalise on general US dollar softness. After sliding below US$0.61 earlier in the week, the NZD struggled to mount any real upside momentum, testing a break and intraday highs at US$0.6106, before slipping back toward US$0.6080 and closing lower on the day. With little of note on the domestic ticket, the NZD was at the mercy of offshore drivers. Extended CNY downside continues to act as a headwind for NZD, with the offshore CNH breaking key supports at 7.30 and appears destined to leak further to the downside in the face of a stronger USD.Our attentions turn now to US PCE data tonight, while the First Trump v Biden presidential debate today could spark volatility.
Key Movers
Price action among majors was mixed through Thursday, as US treasury yields relinquished some of Wednesday's upside, affording room for the euro and GBP to eke out gains, while antipodean units faltered. The day's biggest loser however was the Swedish kroner, sliding after the Riksbank signaled it intended to gut rates three more times before the year is out. The yen joined the SEK and other underperformers unable to mount any upward momentum despite the correction in US yields. The USD again tested resistance at 160.80 before edging back toward 160.50.Our attentions turn now to a packed agenda to close the week. The First Trump v Biden Elections start at 11am AEST and will likely run for 90 minutes, which should provide some valuable entertainment and may distract from the day's big ticket item, the OPCE deflator report. We expect to see softer inflation signals supporting calls for the FOMC to bring forward rate cuts. A surprise to the upside could allow the USD to mount an upward run into the weekend. Also on the docket, Tokyo CPI numbers and preliminary EU inflation numbers.
Expected Ranges
- NZD/USD: 0.6050 - 0.6180 ▼
- NZD/EUR: 0.5620 - 0.5720 ▼
- GBP/NZD: 2.0650 - 2.0950 ▲
- NZD/AUD: 0.9080 - 0.9200 ▼
- NZD/CAD: 0.8280 - 0.8380 ▼