Home Daily Commentaries Kiwi gives up rebound amid stronger US labour market

Kiwi gives up rebound amid stronger US labour market

Daily Currency Update

The New Zealand dollar retraced Wednesday’s upturn through trade on Thursday amid a backdrop of stronger US labour market data. Having tracked within a narrow handle for much of the domestic session, the NZD looked set to break back above US$0.60 before a risk-off mood enveloped markets. Since the local daily close, it has been one-way traffic as investors chased US treasuries higher following stronger-than-anticipated US jobless claims. The US labour market continues to show remarkable resilience in the face of rising interest rates and this latest print suggests there will be little easing in labour market pressures through the near term. With inflation and labour market performance key in driving Fed policy moving forward, markets pushed US rates and treasuries higher, prompting a correction in yesterday’s risk-on mood that saw equities and risk assets rally. Having slipped below US$0.5950 the NZD opens this morning buying US$0.5923.
Our attention now turns to the Jackson Hole Symposium on Monetary Policy. Fed Chari Jerome Powell’s address will prove key in guiding expectations leading into September.

Key Movers

The USD set about reversing Wednesday's downturn, edging upward against most counterparts through trade on Thursday following stronger-than-anticipated US labour market data. Jobless claims fell by 10,000 last week reinforcing the consistency of the labour market through the last 12 months. With no obvious upturn in welfare claims the labour market is expected to project underlying strength through the rest of 2023. Without rising unemployment claims the unemployment rate will remain flat and offer little to ease pressure on the jobs market. Against this backdrop, US treasuries edged higher while equities and risk assets retreated. The euro and the GBP are trading at US$1.08 and US$1.26 respectively as our attentions turn to the Jackson Hole Symposium on Monetary Policy. With Powell expected to reiterate the Fed’s “Job not done” message, we could see the USD gather support into the weekly close. Depending on the tone adopted by Powell we anticipate volatility across treasury yields as markets adjust expectations for rate hikes leading into September and Q3.

Expected Ranges

  • NZD/USD: 0.5890 - 0.5980 ▼
  • NZD/EUR: 0.5450 - 0.5530 ▼
  • GBP/NZD: 2.1180 - 2.1420 ▲
  • NZD/AUD: 0.9200 - 0.9300 ▲
  • NZD/CAD: 0.8000 - 0.8100 ▼