A new day and a new Low: NZD moves closer to break below 0.60
Wednesday 7 September, 2022
Daily Currency UpdateThe New Zealand dollar fell sharply through trade on Tuesday, giving up 0.61 US cents amid another US dollar upswing. Having edged toward intraday highs at 0.6130 through the early part of the local session the NZD began trending lower through the afternoon before unraveling overnight. A stronger than anticipated US ISM Service index print further underpinned an expectation of resilience across the US economy, fueling demand for US treasuries and propelling the world's base currency to fresh 20-year highs. The elevated US dollar and weakening in the Chinese Yuan added more downward pressure on the NZD as a move below the psychological 0.60 handle is now within striking distance. Having touched intraday lows at 0.6040 our attentions turn now to key commentary from FOMC and Fed Vice Chair Lael Brainard. With little of note on the domestic ticket, direction will continue to stem from offshore stimuli. Sustained US economic strength and elevated Central bank policy expectations will likely fuel demand for the USD through the near term leaving the NZD vulnerable to further depreciation.
Key MoversThe US dollar outperformed its counterparts through trade on Tuesday, extending recent DXY index gains to fresh 20-year highs. The upside surprise in ISM services data underpinned expectations of resilience across the US economy. The US economy remains relatively strong when compared with other major economies, particularly the UK, China, and Euro Area. US economic strength has fueled expectations the Fed will continue its pursuit of higher interest rates in a bid to control inflation, while depreciation in demand for risk amid rising fears of a deep and extended global recession has fueled further demand for the dollar as a haven bid. The USD reach a fresh 24 year high against the JPY surging through 143. The BoJ persistent yield curve control and elevated US treasury rates have fostered a collapse in the Yen as the gap in yields continues to widen. The Euro fell below 0.99, marking session lows at 0.9870 while the GBP proved resilient staving off a break below 1.15. Confirmation Liz truss will be the UK’s new prime minister and the announcement of a massive fiscal stimulus plan to protect households from rising energy costs helped afford some support to the embattled GBP.
- NZD/USD: 0.5980 - 0.6130 ▼
- NZD/EUR: 0.6050 - 0.6150 ▼
- GBP/NZD: 1.8820 - 1.9120 ▲
- NZD/AUD: 0.8930 - 0.9020 ▲
- NZD/CAD: 0.7880 - 0.8030 ▼