NZD falters again in face of resistance
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Daily Currency Update
The New Zealand dollar enjoyed a bullish start to the week, surging through resistance amid a broadly weaker USD. Having edged toward resistance at US$0.60 through trade on Friday, the NZD surged higher on Monday morning, pitching through US$0.6030 to mark a fresh year-to-date high at US$0.6032. A de-escalation in US and EU trade tensions helped spur demand for risk, further dampening demand for the USD and allowing the NZD to stretch its legs.It was, however, unable to hold gains through overnight trade, retreating below US$0.60. While our medium and longer-term outlooks support a higher NZD, it is clear that resistance at US$0.6030 remains firmly entrenched, with yesterday’s move only reinforcing levels. With net moves across other majors well contained, the NZD remains relatively unchanged, trading sideways against the euro and GBP.
Our attention today turns to China's industrial production data and a Bank of Japan policy announcement, with US durable goods orders and consumer confidence data dominating the overnight macroeconomic ticket. Once again, trade and geopolitical tensions will drive the underlying risk premia, and we are closely monitoring trade talks between the US and the EU.
Key Movers
The USD pitched lower on Monday after President Trump walked back his threat to impose a 50% tariff on the EU this weekend, extending the deadline to July 9th after talking with EC President Ursula von der Leyen. The announcement helped drive support for European and US equities while fuelling demand for other risk assets, driving the USD lower. With the USD already on the back foot amid a growing “sell America” narrative, the euro tested a break above 1.14, while the GBP closed in on 1.36 and the yen drove the dollar below 142.50.US dollar negatives are accumulating as the market focus shifts to account for US fiscal risk. The Moody’s downgrade of US credit, President Trump's flagship fiscal legislation and a widening debt burden have amplified calls to sell the USD. Trade and fiscal uncertainty should ensure the dollar remains under pressure and opens the door for other majors to enjoy extended gains. US durable goods orders and consumer sentiment will offer key insights into the impact of tariffs on US consumers, while EU consumer confidence data and a Bank of Japan policy meeting round out the macro ticket.
Expected Ranges
- NZD/USD: 0.5950 - 0.6030 ▲
- NZD/EUR: 0.5200 - 0.5300 ▲
- GBP/NZD: 2.2400 - 2.2700 ▲
- NZD/AUD: 0.9200 - 0.9300 ▲
- NZD/CAD: 0.8200 - 0.8300 ▲