NZD unchanged as markets eye US CPI data and ECB policy news
Wednesday 8 June, 2022
Daily Currency UpdateThe New Zealand dollar is little changed from this time yesterday having failed to break above 0.65 US cents. The local unit tracked lower through the domestic session, giving up 0.6490 to mark intraday lows below 0.6430 as markets looked to positions themselves ahead of the RBA policy announcement and key US CPI data and ECB policy news. The NZD slipped below 0.90 against the AUD, as its Antipodean counterpart surged on the heels of a 50-basis point rate hike. Having stubbornly held onto supports above 0.9020 through the last month, the extension below 0.90 opened the door for a break toward intraday lows of 0.8960. The NZD has suffered a relentless correction against the AUD through the last 6 months, as near-term central bank interest rate expectations converge, while the Australian domestic economic outlook appears stable and commodity prices continue to outperform.
The NZD did find some momentum through the latter half of the US session, recovering the days decline to track back toward 0.65 US cents, amid a correction in US treasury rates. With little of note on today’s ticket our attentions remain affixed to US CPI and the ECB monetary policy update on Thursday as key critical risk events guiding short term direction.
Key MoversPrice action across major currencies was mixed through trade on Tuesday with the US dollar index largely flat. Despite a correction in US treasury rates, 10-year yields slipped back below 3%, the USD extended recent gains against the Japanese yen. The elevated global rates backdrop and BoJ commitment to accommodative monetary policy allowed the dollar to mark fresh 20-year highs above 133. USD/JPY gains were offset by outperformance from the Great British pound. Sterling carried Monday’s momentum through Tuesday testing 1.26. Investors appear calmed after Boris Johnson survived a no confidence vote on Monday, despite having staved off the attack from within his own party, there are many who still believe Johnson’s days are numbered. His predecessor Theresa May survived a similar no confidence motion with a larger majority back in 2018, yet a divided party room mean she was unable to push legislation through parliament, forcing her resignation just 6 months later. Many expect Mr Johnson may face a similar fate. Sustained political uncertainty could weigh on the pound as we move through the second half of the year.
- NZD/USD: 0.6430 - 0.6530 ▼
- NZD/EUR: 0.6030 - 0.6120 ▼
- GBP/NZD: 1.9280 - 1.9520 ▲
- NZD/AUD: 0.8930 - 0.9030 ▼
- NZD/CAD: 0.8080 - 0.8180 ▼