Home Daily Commentaries New Zealand dollar well contained as price action narrow

New Zealand dollar well contained as price action narrow

Daily Currency Update

New day, same old story. Price action across majors was well contained through Tuesday and the NZD tracked within a narrow trading handle. With little of note on the domestic ticket to drive direction attentions turned offshore. A softening Chinese yuan coupled with an uptick in US treasury yields amid mixed US data and commentary forced the kiwi toward US$0.61 overnight before supports kicked in and the currency rebounded back near US$0.6120 leading into the morning’s open. With most majors tracking within a thin handle the NZD remains largely unchanged against most key counterparts and our attention now turns to Australian inflation data. The RBA’s tolerance for upside inflation surprises is narrow and a surprise uptick in price pressures likely pushes back calls for a rate cut and may force the NZD to edge back toward A$0.9150.

Key Movers

Another quiet day across currency markets with most majors trading within a narrow 0.2% band when measured back against the US dollar. The Canadian dollar was the day's big mover finding support following a stronger than expected CPI inflation print. May CPI numbers printed a year-on-year increase of 2.9%, up from 2.7% in April and 0.3% above market estimated. The surprise increase in inflation was driven by the service and health sectors and forced analysts to unwind bets for a July rate cut. Markets now estimate there is just a 1 in 5 chance the Bank of Canada cuts rates in July, instead of firming bets for a September rate adjustment. With Canadian yields rallying the Canadian dollar touched intraday highs at $US0.7330. The upturn was however short-lived and USD momentum forced a retracement and move back toward US$0.7315. While there was no headline US data on the docket ongoing mixed messaging from Fed officials and US data sets ensured the outlook around the timing and trajectory of US rate cuts remains clouded. Commentary from two key Fed officials was at loggerheads with Member Bowman suggesting a rate cut this year may be too soon and could incite a rebound in inflation and policy increase in the future, whereas Member Cook suggested that it will be appropriate to reduce rates at some point with the timing determined by how data evolves. The contrasting comments coupled with a downturn in consumer confidence and stronger labour market conditions perfectly illustrate the conundrum facing markets. The timing and pace of monetary policy change is still very much unknown and until a clear path emerges ranges across major currencies are likely to be well contained.

Expected Ranges

  • NZD/USD: 0.6080 - 0.6200 ▼
  • NZD/EUR: 0.5650 - 0.5750 ▲
  • GBP/NZD: 2.0600 - 2.0800 ▲
  • NZD/AUD: 0.9150 - 09250 ▲
  • NZD/CAD: 0.8300 - 0.8400 ▼

Written by

Matt Richardson


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.