NZD falters as US recession concerns rise
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Daily Currency Update
The New Zealand dollar starts the week on the back foot as a risk-off mood enveloped markets on Monday. With little of note on the macro docket, attention was again affixed to headline news flow as President Trump appeared on Fox News. His comments rocked markets and sent risk assets spiralling. When asked about the chances of a recession, Trump responded, “there is a period of transition because what we are doing is very big”, the comments mirrored those of Treasury Secretary Scott Bessent, where in he implied a “detox period” was required.US equities plunged and the NZD followed suit, living up to its status as the whipping boy in a risk-off environment. Having opened the day just south of US$0.5750, the NZD tumbled through US$0.57 to mark intraday lows at US$0.5690, before finding support.
Our attention remains affixed to US recession and geopolitical headlines, while domestic business data, US JOLTS jobs data and the NFIB survey provide some macroeconomic colour in an otherwise quiet calendar.
Key Movers
There is plenty to absorb this morning as US recession fears sparked a risk-off shift and sent equities, yields and risk correlated currencies spiralling on Monday. Comments from President Trump in an interview with Fox News in the US on Sunday, echoed those proffered by Treasury Secretary Scott Bessent last week and suggest a recession is unavoidable.The S&P 500 and Nasdaq both tumbled with the S&P 500 down near 4% at one point, before closing the day 2.7% lower. From its peak after the election, the S&P 500 is now down 9% and has fallen below where it sat before Trump's victory. Market analysts have lifted their expectations for recession with some 40% now pricing a contraction in growth through the rest of 2025, driving yields lower and elevating calls for multiple Fed rate cuts.
Despite the decline in US yields, the risk off mood helped prop up the dollar as the euro and GBP both gave up ground, while the yen enjoyed a boost as a key haven asset.
With little of note on the macroeconomic agenda, our attention remains with recession headlines and geopolitical commentary.
Expected Ranges
- NZD/USD: 0.5600 - 0.5750 ▼
- NZD/EUR: 0.5200 - 0.5350 ▼
- GBP/NZD: 2.2400 - 2.2700 ▼
- NZD/AUD: 0.9020 - 0.9120 ▲
- NZD/CAD: 0.8120 - 0.8280 ▲