Home Daily Commentaries NZD punches back above US$0.59 amid risk off mood

NZD punches back above US$0.59 amid risk off mood

Daily Currency Update

The New Zealand dollar extended Monday’s shallow recovery, pushing back above US$0.59 despite a short and sharp risk off move. Fears the war between Russia and Ukraine will escalate to include the use of nuclear weapons forced investors toward haven assets, driving the NZD back below US$0.5880 to intraday lows at US$0.5877. As tensions eased and a calm settled over markets analysts unwound risk off moves allowing the NZD to resume its short run recovery. The NZD pushed back through US$0.59 edging higher through overnight trade to open just above US$0.5910.

With little of note on today’s domestic ticket, we look to global forces for direction. China loan data, UK CPI numbers and euro area wage data dominate while US treasury performance will help guide market sentiment.

Key Movers

There is plenty to digest this morning after a risk off move enveloped markets overnight. New Ukraine had fired a series of long-range missiles into Russia and reports President Putin had upgraded Russia’s nuclear doctrine enabling Russia to utilise its vast nuclear arsenals against non-nuclear states supported by nuclear powers. The fear of another escalation in tensions in Europe’s east pushed investors toward haven assets and cleaved through FX and equity markets. The USD and JPY lurched upward with the DXY index moving back through 106.50 before the Russian Foreign Minister helped assuage fears stating, “We are strongly in favour of doing everything possible not to allow nuclear war to happen”. As calm was restored to markets investors set about retracing the day's earlier moves and most majors opened this morning in much the same positions as yesterday. The Canadian dollar was the day's strongest performer up 0.33% following its CPI data print. Headline CPI rose faster than anticipated in October rousing doubts as to whether the Bank of Canada will apply another 50-point cut before year-end. Markets are now pricing a 30-point adjustment before year-end suggesting analysts are divided between a 25- and 50-point adjustment.
Our attention now turns to UK CPI inflation data, Euro Area wage data, and the latest US treasury auction.

Expected Ranges

  • NZD/USD: 0.5850 - 0.5950 ▲
  • NZD/EUR: 0.5550 - 0.5620 ▲
  • GBP/NZD: 2.1300 - 2.1600 ▼
  • NZD/AUD: 0.9000 - 0.9100 ▼
  • 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.