NZD underperforms despite improved risk sentiment

Daily Currency Update

Risk sentiment improved through trade on Monday following reports at the weekend that the pending US reciprocal tariff review will be narrower in scope than first feared. Both Bloomberg and The Wall Street Journal reported tariffs would be focused on 15 nations with persistent trade imbalances, with further sector-specific tariffs to be announced as well.

While New Zealand appears to have earned a reprieve and may avoid the ire of President Trump, the NZD failed to capitalise, despite the uptick in risk sentiment. The NZD was one of the day's worst performers, showing a modest overnight decline to intraday lows of US$0.5711 before finding support. Having fallen against the USD, the NZD also gave up ground against key major counterparts sliding back toward AU$0.91, while falling to 0.4425 against the pound and below 0.53 against the euro.

With nothing of note on the domestic ticket, our attention turns offshore with US consumer confidence, Germany’s ifo business survey and Bank of Japan policy meeting minutes round out the macroeconomic docket, while tariff headlines continue to dominate market sentiment and direction.