Home Daily Commentaries NZD outperforms as major counterparts range bound

NZD outperforms as major counterparts range bound

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Tuesday 20 February, 2024

Daily Currency Update

The New Zealand dollar outperformed all major counterparts in what was otherwise a lacklustre start to the week. With US markets closed in observance of President’s Day and little Tier 1 macroeconomic data on hand to drive direction, investors appear content in maintaining a narrow trading range.

A stronger-than-expected PSI (Performance Service Index - a measure of activity across the service sector) read helped drive NZD gains. Up 0.3% on the day, our attention turns now to the RBA meeting minutes and Canadian CPI inflation data for direction through Tuesday.

The NZD remains vulnerable to US-implied monetary policy expectations. With US PPI numbers higher than expected on Friday an elevated PCE deflator print next month is on the table. As the Fed’s preferred measure of inflation, a strong read could push back expectations for a rate cut and weigh on the NZD.

Having moved up to US$0.6145, the NZD is stronger against all key crosses.

Key Movers

Price action was muted through trade on Monday, with the NZD the only major showing any sign of life. US markets were closed and a marked absence of headline data and newsflow ensured there was little impetus for investors to drive a shift in direction.

The USD, EUR, GBP and JPY all maintained narrow trading handles with moves restricted to the second decimal point. The US dollar continues to hold above 150 against the yen, while the euro and GBP offered little to excite investors.

While markets return from Presidents Day and Chinese New Year we may see some moves as liquidity levels normalise but with little outside the RBA minutes and Canadian CPI on the macroeconomic docket, we could be in for another quiet day.

We don’t expect the RBA minutes to offer anything we don’t already know while Canadian CPI is expected to show further annual depreciation across both headline and core metrics.

Expected Ranges

  • NZD/USD: 0.6050 - 0.6200 ▲
  • NZD/EUR: 0.5650 - 0.5750 ▲
  • GBP/NZD: 2.0300 - 2.0700 ▼
  • NZD/AUD: 0.9350 - 0.9420 ▲
  • NZD/CAD: 0.8150 - 0.8230 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.