NZD under pressure as near-term focus on additional Fed rate hikes
Tuesday 28 February, 2023
Daily Currency UpdateThe New Zealand dollar tracked sideways through trade on Monday in what was a relatively quiet start to the week when compared with the tumult caused by another US data surprise on Friday. With little of note on the domestic macroeconomic ticket, the NZD tracked toward intraday lows just north of US$0.6130 as a broader risk-off tone enveloped trade action. Having fallen through the back end of the domestic session, the NZD found some overnight support after weaker-than-anticipated US durable goods data and reports the UK and EU have agreed to a new trade deal, which softens protocols surrounding the only shared border in Ireland, helped alleviate risk aversion. Attention today turns to the ANZ business outlook. The survey should capture the impacts of the floods in Auckland in late January, but will not yet reflect the damage caused by cyclone Gabrielle. With domestic supply chains already stretched and confidence dented back-to-back natural disasters will have done little to improve sentiment. The NZD will likely continue to face near-term downward pressures as market attentions remain affixed to near-term Fed policy.
Key MoversThe GBP was the standout performer through trade on Monday, climbing nearly 1% on the heels of reports the UK and EU have finally agreed to a new trade deal, which softens protocols surrounding the Northern Ireland border. The only shared land border has been a sticking point throughout the entirety of the Brexit process. The newly announced deal is said to reduce much of the trade and logistics issues that have plagued activity. While the agreement still needs to be ratified in parliament, the mood is much improved, lifting the GBP back above 1.20. The positive sentiment has spilled over into the euro with the single currency up half a per cent, climbing back above 1.06 to touch session highs just shy of 1.0620. With little of note on today’s macroeconomic ticket attention remains affixed to price action across rates and treasuries as a key marker driving risk appetite.
- NZD/USD: 0.6080 - 0.6220 ▼
- NZD/EUR: 0.5780 - 0.5850 ▼
- GBP/NZD: 1.9380 - 1.9720 ▲
- NZD/AUD: 0.9120 - 0.9180 ▼
- NZD/CAD: 0.8320 - 0.8420 ▼