NZD buoyed after RBNZ policy meeting and USD retracement
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Daily Currency Update
The NZD was among the better performers through trade on Wednesday, lifted by expectations of a slowing to the pace of monetary policy easing. The RBNZ announced a 50-point cut to the underlying cash rate from 4.75% to 4.25% yesterday, in line with analyst expectations. However, with market pricing suggesting a 75-point cut was on the table, the 50-point adjustment afforded the NZD a boost. The statement that followed the announcement outlined concerns surrounding lacklustre growth and highlighted that inflation is now comfortably within the Bank's target range. Officials noted that should conditions evolve as expected, further cuts will be issued through Q1 next year. Markets took updated projections as a signal the bank will slow the pace of cuts, allowing the NZD to jump back above US$0.5850. The NZD maintained the domestic session momentum through overnight trade, pushing back through US$0.59 amid a significant USD retracement and month end re-balancing.With US markets closed for Thanksgiving, there is little macro data of note to drive direction through the coming 24 hours.
Key Movers
The US dollar fell sharply through trade on Wednesday, with the DXY dollar index giving up close to 2% amid month-end rebalancing and profit taking. Having lurched higher Tuesday after Trump’s promise for steeper tariffs, the USD retraced gains Wednesday. With minimal headline data or news flow on hand, it seems investors sought to square positions, while rebalancing positions after a strong performance across equities through November. The decline was greatest against the euro, GBP and JPY. The euro advanced 0.8% and is now trading above 1.0550, while Sterling climbed nearly 1% to trade just short of 1.27 and the JPY forced the USD near 1.3% lower and back below 151.50. The CAD was one of the day's underperformers, as analysts are still digesting President-elect Trump's promise to impose a 25% tariff on Canadian imports.With US markets closed for Thanksgiving, there is little macro data on hand to drive direction through the next 24 hours.
Expected Ranges
- NZD/USD: 0.5820 - 0.5920 ▲
- NZD/EUR: 0.5520 - 0.5620 ▲
- GBP/NZD: 2.1200 - 2.1600 ▼
- NZD/AUD: 0.8980 - 0.9120 ▲
- NZD/CAD: 0.8180 - 0.8320 ▲