NZD tests new 2024 low
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Daily Currency Update
The New Zealand dollar moved lower Tuesday giving up the goodwill won following the promise of robust monetary and fiscal stimulus from China Politburo. Having started the day just below US$0.5870 the NZD fell steadily through the domestic session and the sell-off accelerated following the Australian Reserve Banks Dovish pivot. The NZD was dragged through US$0.5850 and continued lower through the overnight session as a broadly stronger US dollar exacerbated losses. A dovish domestic outlook coupled with the uncertainty surrounding global trade and the promise of China Tariffs from President-Elect Donald Trump has pushed markets away from the NZD. Having slipped below US$0.58 the NZD marked a fresh 2024 and opens this morning near US$0.5790.Our attention now turns to US CPI and the Bank of Canada policy announcement as the major items on the macroeconomic agenda.
Key Movers
The US dollar strengthened through trade on Tuesday and showed little sign that its post-election rally would end. The DXY index climbed 0.4% amid significant rebalancing of the AUD NZD, euro and yen. The euro eyed a break below 1.05 before finding support while the JPY allowed the USD to push back above 152. Commentary from Bank of Japan Governor Himino suggested a December rate hike is now unlikely, and it is expected any policy change will now be deferred through the New year.Our attention now turns to US CPI data. We expect a further contraction in the annual rate of inflation and are keenly attuned to the final headline print as a key marker leading into next week’s FOMC policy meeting. A surprise uptick inflation pressure will likely diminish calls for a final quarter point cut this year and add further strength behind the USD.
The Bank of Canada will also make its final policy decision for 2024 overnight. We expect a 50-point cut.
Expected Ranges
- NZD/USD: 0.5750 - 0.5880 ▼
- NZD/EUR: 0.5480 - 0.5600 ▼
- GBP/NZD: 2.1700 - 2.2200 ▲
- NZD/AUD: 0.8980 - 0.9120 ▼
- NZD/CAD: 0.8150 - 0.8300 ▼