New Zealand dollar unable to repel USD upswing
Written by
Daily Currency Update
The New Zealand dollar retreated Tuesday in the face of a broadly stronger US dollar. After Monday’s sharp correction, markets adopted a much more cautious tone as US treasury yields and equities fell. US-China trade talks concluded in Stockholm with no final agreement announced. While both sides indicated a willingness to extend the current tariff truce, the lack of a new deal elevated concerns that the two sides will not find a compromise. The NZD showed a small fall, down through US$0.5950 to mark intraday lows at US$0.5943 before finding support and settling between US$0.5955 and US$0.5960. While moves against key crosses have been well contained, the NZD has capitalized on euro softness, pushing back through 0.5160 up 1% this week to sit at its highest level since the start of July.Our attention now turns to a crowded macro ticket with Australian CPI data, Eurozone GDP numbers, a Bank of Canada policy meeting, US advanced payroll numbers and the Fed policy meeting all driving direction.
Key Movers
The USD upswing continued through trade on Tuesday despite a weaker-than-anticipated US JOLTS jobs report and falling US treasury yields. 10-year yields fell as month-end buying, a shift in treasury debt issuance strategies, and a potential September rate cut drove demand toward the short end of the yield curve. The ten-year rate fell to 4.33%, down 7 basis points over the last 24 hours. While a decline in yields would ordinarily prompt a fall in the dollar, markets appeared content in looking beyond the yield correction, driving the dollar higher at the expense of the euro. The euro weakened, extending Monday’s downturn as the fallout from the US-EU trade deal continues to weigh on the shared currency. The euro fell through 1.1550 to a session low of 1.1520, well below the spike seen on Monday’s open. With the USD on the front foot, the pound retreated, sliding below 1.3350 and eyeing a break below 1.33 before finding support. In contrast, the yen pushed back on losses seen through Monday, steadying the ship and forcing the USD back below 148.50.Our attention now turns to euro Area GDP and Bank of Canada policy meeting ahead ADP employment data and the Fed July policy meeting.
Expected Ranges
- NZD/USD: 0.5880 - 0.6030 ▼
- NZD/EUR: 0.5120 - 0.5220 ▲
- GBP/NZD: 2.2300 - 2.2600 ▲
- NZD/AUD: 0.9100 - 0.9200 ▼
- NZD/CAD: 0.8150 - 0.8250 ▼