NZD under pressure as markets eye RBNZ rate cut
Daily Currency Update
The New Zealand dollar struggled through trade on Thursday, unable to foster a break back above US$0.59 as another RBNZ 50-point rate cut looms. With the USD again on the front foot and marking fresh year-to-date highs, the NZD tumbled to an intraday low just above US$0.5850. Markets seem reluctant to lend the NZD any support as markets prepare for next weeks RBNZ policy update. Investors have begun shorting the NZD with flows heading into the AUD as a viable longer run carry trade option.Central bank policy paths have diverged significantly in recent months, forcing the NZD to slide below AU$0.90. Having given up ground to the AUD, USD and JPY, the NZD is stronger against the euro and GBP. Our attentions today turn to Global PMI data release, Japan CPI data and ongoing political headlines.
Key Movers
The euro has been the big mover through the last 24 hours, tumbling to its lowest level in 13 months amid French political instability, dovish ECB commentary and another escalation in the Russia/Ukraine war. Russia is reported to have launched a new ballistic missile into Ukraine, striking the city of Dnipro, further escalating tensions as the threat of nuclear weapons looms.In France, Marine Le Pen, leader of the National Assembly and Far Right national Rally party, warned Premier Michel Barnier that if demands for budget amendments were not met she would have no choice but to call a no confidence vote. There has been growing opposition within the National Assembly to this latest budget with hundreds of amendments put forward, yet it appears Barnier will utilise constitutional powers to push the budget through. In such an instance, we will likely see a no confidence vote called and with French political stability exposed at June’s snap election, the prospect of another hung parliament looms large.
The euro fell below 1.05, sliding to its worst level since October 2023 touching 1.0462, spilling over into the GBP and allowing the US dollar index to mark another 2024 high. Our attentions turn now to Japan CPI data, US, UK and euro area PMI’s, UK retail sales and US consumer sentiment as key macro drivers. Political and geopolitical headlines through Europe and the US continue to steer sentiment into the weekly close.
Expected Ranges
- NZD/USD: 0.5800 - 0.5920 ▼
- NZD/EUR: 0.5520 - 0.5620 ▲
- GBP/NZD: 2.1200 - 2.1600 ▼
- NZD/AUD: 0.8950 - 0.9050 ▼
- NZD/CAD: 0.8120 - 0.8220 ▼