NZD underperforms ahead of RBNZ policy update
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Daily Currency Update
The New Zealand dollar fell Tuesday, sliding below US$0.5950 as the USD outperformed its major counterparts. Since marking Fresh 2025 highs on Monday the NZD has drifted steadily lower marking intraday lows at US$0.5941 while giving up ground to other key crosses. The NZD’s underperformance has forced it below 0.5250 against the euro and 0.44 British pence, while also giving up $A0.9250 and sliding below $A0.9230. Our attentions turn now to today’s RBNZ policy announcement. We expect policy makers will deliver a 25-basis point rate cut to the OCR drawing focus to the accompanying statement and forward guidance. Markets anticipate the cash rate will be lowered to 3% in the coming months but a recent lift in inflation and inflation expectations and heightened global uncertainty may prompt policy makers to adopt a more cautious approach.Key Movers
The USD dollar outpaced most majors on Tuesday as investors and analysts returned from the Memorial Day long weekend and responded to the de-escalation of US/EU trade tensions. On Sunday President Trump recalled his threat to impose a 50% tariff on the EU adding further support to equity markets and risk assets overnight announcing the EU and the US have established a series of key meeting dates, stating “This is a positive event and I hope will finally open up European Nations to trade with the US”. As tensions seemingly eased key equity indices rallied with the S7P 500 and Nasdaq both up leading into the daily close. With risk sentiment improving and global rates falling the JPY underperformed allowing the USD to push back through 144. It was in fact the worst performer on the day giving up ground to all major counterparts, while the euro and GBP are also weaker against the USD. French inflation data printed lower than anticipated and ECB officials noted that the board's 2% inflation target is now within reach.Our attention today remains on trade headlines and the RBNZ Monetary policy statement.
Expected Ranges
- NZD/USD: 0.5900 - 0.6030 ▼
- NZD/EUR: 0.5200 - 0.5300 ▼
- GBP/NZD: 2.2500 - 2.2800 ▲
- NZD/AUD: 0.9180 - 0.9300 ▼
- NZD/CAD: 0.8150 - 0.8280 ▼