Home Daily Commentaries NZD gives up gains amid USD rebound

NZD gives up gains amid USD rebound

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 8 May, 2024

Daily Currency Update

The New Zealand dollar tracked lower through trade on Tuesday, giving up gains hard won through last week and sliding back below US$0.60. A broadly stronger US dollar and softer yen forced the NZD off highs just above US$0.6020 and back toward session lows at US$0.5995. There has been no real catalyst behind the move outside US dollar repositioning and a broader correction across risk assets. While underperforming against the USD the NZD did enjoy strong gains against the GBP, pushing to ward £0.48, while recovering ground against the AUD and pushing above A$0.91 following the RBA policy update. The hopes of an RBA rate hike doused by RBA officials AUD yields faltered elevating demand for the NZD as a carry trade.

With little of note on today’s macro docket, we expect another largely uneventful session with movements well contained within recent ranges.

Key Movers

The US dollar outperformed through trade on Tuesday recovering losses suffered in the wake of the Federal Open Market Committee policy update and softer than anticipated Non-farm payroll print. The DXY dollar index jumped 0.4% on the day led by gains against the yen. Having forced the USD back below ¥152 on Friday last week the yen has been unable to maintain any momentum and now trades just below ¥155 at ¥154.70. After two rounds of Ministry of Finance intervention last week markets are now questioning whether officials can maintain yen support. With gains driven by a backdrop of higher yields and divergent central bank policies, the yen is fundamentally weak, yet markets remain jittery given the prospect of intervention and we are closely monitoring any outsized moves. With the GBP underperforming and the euro trading flat, our attention now turns to Thursday’s Bank of England policy update. We expect rates will be left on hold at 5.25% and are instead keenly focused on the commentary surrounding the meeting for any clues as to the timing and trajectory of future rate movements.

Expected Ranges

  • NZD/USD: 0.5920 - 0.6020 ▼
  • NZD/EUR: 0.5500 - 0.5600 ▼
  • GBP/NZD: 2.0700 - 2.1000 ▼
  • NZD/AUD: 0.9050 - 0.9150 ▲
  • NZD/CAD: 0.8200 - 0.8300 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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