Daily Currency Update
The New Zealand dollar crept higher through trade on Tuesday as markets partially reversed losses suffered through Friday and Monday following Friday’s scorching hot US non-farm payroll print. Having touched intraday just south of US$0.6050 the NZD moved back above US$0.6075 following a rebound in Chinese and Hong Kong stocks. A key meeting with Chinese President Xi and a shift in policy and regulations announced by regulators helped fuel a recovery in the CSI 300 and Hang Seng Index., fueling support for the Chinese yuan. While we have seen a decoupling in yuan performance and NZD value there is still some spillover and a stronger China outlook is key to consolidating any extension back toward US$0.64. Our attentions turn to the labour market date where we expect the unemployment rate will have jumped above 4%, potentially helping accelerate the lower trajectory of wages and inflation. A print outside expectations could alter RBNZ policy pricing and prompt volatility through the domestic session ahead of an overnight session dominated with 2nd tier data.
Key Movers
The USD slipped through trade on Tuesday as markets appeared content in sitting back, taking stock and partially reversing some of the gains won in the post non-farm payroll and Federal Open Market Committee rally of last week. The JPY, GBP, CAD and euro all enjoyed small gains. With just 2nd tier data on hand, markets responded to comments from Fed officials Neel Kashkari and Loretta Mester. While both were at pains to say the Job is not done yet, they suggested they expected to be comfortable in cutting rates later this year as inflation moves toward the 2% target over the next 6 months. Equity performance was mixed and US treasuries were choppy moving lower following a 3-year note auction. Yields were lower across the curve weighing on the USD. With just 2nd tier data on hand through trade today our eyes shift to Thursday's unemployment claims report as another key marker of labour market performance.
Expected Ranges
- NZD/USD: 0.6030 - 0.6130 ▲
- NZD/EUR: 0.5620 - 0.5700 ▲
- GBP/NZD: 2.0600 - 2.0800 ▲
- NZD/AUD: 0.9280 - 0.9350 ▼
- NZD/CAD: 0.8170 - 0.8230 ▼