NZD underperforms as US dollar climbs against major counterparts
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Daily Currency Update
The New Zealand dollar fell through trade on Monday amid a broad US dollar upswing. With little of note on the domestic ticket, our focus was again on White House commentary and policy announcements. President Trump announced considerations to allow Nvidia and AMD to sell more advanced processors into China; however, a 15% tax would be applied to all exports as part of a new export licence scheme. The policy announcement suggests a deeper pivot toward a program of State Capitalism as Trump and the Republicans exert more control over the economy.The prospect of tariffs on imports and a tax on exports is a concerning development and should have been enough to drive the dollar lower. Instead, the market seems content to adopt a view that more US exports to China are a good thing, even if the government is planning to take a cut. The NZD slid below US$0.5950, marking session lows at US$0.5922 before finding support.
Our focus today turns to the RBA policy announcement, UK labour market data and the US CPI data.
Key Movers
The US dollar advanced against most major counterparts through trade on Monday, despite alarming policy proclamations from the White House. The Financial Times reported that Nvidia and AMD will forego 15% of revenues on chip sales to China as part of a new export licence scheme.The new program will see taxes applied on exports and imports, deepening the government’s control over the economy. While normally alarming, the market has largely ignored the announcement, with equities and treasury yields flat and the USD elevated. The DXY index is up 0.3% led by losses in the Euro, down 0.2%, the JPY down 0.3% and CHF down 0.5%.
Our attention turns now to UK labour market data and monthly US CPI numbers.
Expected Ranges
- NZD/USD: 0.5880 - 0.5980 ▼
- NZD/EUR: 0.5080 - 0.5130 ▲
- GBP/NZD: 2.2400 - 2.2700 ▲
- NZD/AUD: 0.9050 - 0.9180 ▼
- NZD/CAD: 0.8120 - 0.8220 ▲