NZD slide extended as markets chase haven assets ahead of US ‘Liberation Day’
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Daily Currency Update
The New Zealand dollar underperformed on Monday, extending last week's risk-off move amid rising uncertainty and fears that a global recession is imminent. Investors have sidelined major bets ahead of the Trump administration's so-called 'Liberation Day,' when it completes its reciprocal tariff review. There is much anticipation as to what Trump will announce. Markets have speculated on how aggressive the President will be, yet mixed messaging over the last 2 weeks has only heightened uncertainty.A Wall Street Journal article yesterday suggested that policymakers plan to introduce a blanket 20% tariff, a program that goes against comments Trump made last week, suggesting that markets would be pleasantly surprised by the leniency proffered. The NZD plunged below US$0.57 on Monday, eyeing a break below US$0.5650, as markets lent toward haven assets. NZD losses were not contained to the USD, marking a fresh nine-year low against the pound, falling below 0.44 while sliding below 0.5250 against the euro and giving up ground to the haven yen. We expect the NZD will continue to underperform leading into Thursday.
Near-term performance depends entirely on the outcome of the US policy review and tariff program moving forward. We expect ample volatility through the end of the week as markets respond to headlines and policy news.
Key Movers
The US dollar outperformed on Monday as haven assets carried the day amid an extension of last week's risk-off mood. Uncertainty is rife ahead of 'Liberation Day,' highlighted by the performance of equities and risk assets. Asian equities plunged on Monday while Euro stocks gave up nearly 1.5%, and US indices fell again. It's clear markets do not like the uncertainty created by the US reciprocal tariff review.Attempts to interpret commentary have only elevated confusion, and we expect risk assets will remain under pressure until a clearer picture is made available. The US dollar climbed against most counterparts as safe haven play overwhelmed concerns for US growth under an aggressive tariff program. With the euro and GBP on the back foot, the yen was the only major that benefited from the extended risk-off push.
Our attentions remain affixed to 'Liberation Day' and the policy announcements that come.
Expected Ranges
- NZD/USD: 0.5620 - 0.5720 ▼
- NZD/EUR: 0.5200 - 0.5300 ▼
- GBP/NZD: 2.2600 - 2.2900 ▲
- NZD/AUD: 0.9050 - 0.9150 ▼
- NZD/CAD: 0.8100 - 0.8200 ▼