NZD buoyed as US tariff agenda sinks USD
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Daily Currency Update
What a wild 24 hours. Volatility across financial markets pitched higher on Thursday as markets absorbed and responded to “Liberation Day” announcements and the US’s new tariff agenda. President Trump announced yesterday his administration would impose a blanket 10% tariff on just over two thirds of the countries around the world, while a further 60 countries running an elevated trade surplus with the US will face significantly higher taxes. Yesterday’s announcement and updated trade agenda is much more aggressive than we anticipated, prompting a significant shift in risk sentiment. US risk assets tumbled while markets chased haven corridors, yet the NZD edged higher on the day. Despite the risk-off move, investors are seemingly more concerned for the implications of the new tariff agenda on US economic growth, with recession fears rising. The USD underperformed, unable to benefit from its haven status and the NZD climbed off lows below US$0.5690, punching through US$0.58 to touch an intraday high just short of US$0.5850.The NZD opens this morning near US$0.5810. Our focus remains on tariff headlines and the broader market response, along with US non-farm payrolls, which will prove key in shaping direction into the weekly close.
Key Movers
The US dollar plunged through Thursday as markets responded to the US’s revised tariff agenda. Market focus shifted toward the negative impacts of tariffs on US growth, rather than the possible inflation implications driving US yields lower, as markets priced in additional Fed rate cuts through the end of the year. Markets are now pricing 92 basis points of cuts versus 77 points priced prior to “Liberation Day” announcements. US risk assets and the dollar suffered heavy losses, with the US DXY index down 1.63%, led by gains for the safe haven yen and Swiss franc, while the euro enjoyed strong gains up over 1.1030 and the British pound eyed a break toward 1.32, before settling near 1.31 leading into the Asian session on Friday.Our focus today remains with the fall out from the US reciprocal tariff agenda, while US non-farm payrolls dominate the macroeconomic ticket. We are keenly attuned to underlying labour market performance. A soft read will only elevate concerns for recession and could weigh on the USD into the weekly close.
Expected Ranges
- NZD/USD: 0.5680 - 0.5890 ▲
- NZD/EUR: 0.5200 - 0.5300 ▼
- GBP/NZD: 2.2500 - 2.2900 ▼
- NZD/AUD: 0.9080 - 0.9180 ▲
- NZD/CAD: 0.8120 - 0.8220 ▲