NZD under pressure as attentions turn to RBNZ
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Daily Currency Update
The New Zealand dollar was among the worst-performing majors Tuesday sliding back below US$0.57 as markets pare positions ahead of today’s RBNZ policy meeting. A 50-point rate cut has been priced in and is all but a done deal according to market analysts, thus our attentions are affixed to the accompanying commentary and statement of advice. We are keenly attuned to any guidance that offers insight into the path of future rate adjustments. Given the slowdown across the economy since the RBNZ November Monetary Policy Statement we expect policy makers will announce an accelerated easing program with rates moving back to 3% through 2025. Having tested a break above US$0.5750 on Monday the NZD marked intraday lows below US$0.57 overnight and hovers around that handle on open this morning.Key Movers
Price action among majors was somewhat muted through Tuesday as global yields edged marginally higher and macroeconomic data sets printed in line with expectations. The USD enjoyed upside support as markets returned from the Presidents Day long weekend. In the UK headline wage data showed a larger-than-expected rise coupled with strong employment indicators, playing to the BoE’s most recent message of caution and propping up the GBP. The pound touched session highs just short of US$1.2630 before fading through the tail end of offshore trade. In Canada headline CPI printed in line with expectations but core inflation was above estimates forcing markets to pare back bets for a Bank of Canada April rate cut. A 25-basis point adjustment was fully priced in but analysts are now only pricing at 80%. The CAD outperformed following the print and was the best-performing major on Tuesday.Our focus now turns to the RBNZ policy meeting the FOMC January minutes and UK inflation data.
Expected Ranges
- NZD/USD: 0.5620 - 0.5750 ▼
- NZD/EUR: 0.5400 - 0.5500 ▼
- GBP/NZD: 2.1850 - 2.2250 ▲
- NZD/AUD: 0.8920 - 0.9040 ▼
- NZD/CAD: 0.8020 - 0.8150 ▼