NZD sets a new 2024 low as Chinese authorities rumoured to let Yuan depreciate
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Daily Currency Update
The New Zealand dollar marked a new 2024 low through trade on Wednesday, following reports Chinese authorities plan to counter the impact of higher tariffs by allowing the yuan to weaken in 2025. The yuan plunged half a percent against the USD, dragging the NZD toward a new year-to-date low below US$0.58. Having touched US$0.5763, the NZD edged back toward US$0.5790 following a paper released by the People's Bank of China, arguing the CNY had a solid foundation to handle tariffs. The report helped stabilise the CNY and arrest the NZD’s decline, but offered little by way of a catalyst to spark any meaningful recovery.Our attention now turns to domestic consumer spending data, Australian employment numbers and the European Central Bank policy announcement for direction leading into Friday.
Key Movers
The USD was broadly stronger through trade on Wednesday, with the DXY index climbing another quarter of a percent, outperforming all major counterparts except for the Canadian dollar. As expected, the Bank of Canada issued a 50 point interest rate cut while shifting their forward guidance away from further rate cuts to a more balanced and data dependent approach. The prospect of a period of stable rates was enough to help lift the CAD against the USD. Across other majors, the GBP gave up just 0.15%, while the JPY and EUR were weaker. The euro traded below 1.05 and the USD advanced above 152 against the yen.Our attention now turns to the European Central Bank. It is expected to deliver another 25-point rate cut this evening, while we look to the accompanying statement for further guidance as to the timing and trajectory of future hikes. The euro remains under pressure as geopolitical pressures and lacklustre growth across key euro areas weigh on investor demand.
Expected Ranges
- NZD/USD: 0.5720 - 0.5880 ▼
- NZD/EUR: 0.5450 - 0.5550 ▲
- GBP/NZD: 2.1800 - 2.2200 ▲
- NZD/AUD: 0.9050 - 0.9150 ▼
- NZD/CAD: 0.8150 - 0.8250 ▼