Home Daily Commentaries NZD works to consolidate break above US$0.60 amid renewed risk appetite

NZD works to consolidate break above US$0.60 amid renewed risk appetite

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 7 May, 2024

Daily Currency Update

The New Zealand dollar advanced through trade on Monday, extending gains won in the wake of last week's softer-than-expected US payroll and service prints and consolidating a break above US$0.60. With hopes the Fed will cut rates through the back half of 2024 rekindled, the NZD extended its break above US$0.60, advancing to mark intraday highs just short of US$0.6040, before shifting lower and trading sideways around US$0.6010.

The NZD has been well supported since last week's FOMC policy update wherein the Fed maintained its easing bias, taking some of the heat out of the treasury market and putting downward pressure on US yields. With the labour market softening and services data pointing to a slowdown in economic activity expectations the Fed may need to raise rates again have faltered and markets are again looking toward a rate cut before the year is out. With pressure on the USD mounting, there is room for the NZD to extend on gains in the near term.

Attention today turns to the RBA policy update as the lone headline item on the macro docket. With NZD trading below AU$0.91 through last week, forward guidance and any divergence in monetary policy expectations will help shape direction between the antipodean counterparts.

Key Movers

The USD edged higher through trade on Monday, up 0.1% for the day, recovering losses suffered in the wake of last week's softer-than-expected ISM services and non-farm payroll prints. That said gains have been driven by JPY losses and half a per cent rally in USD/JPY, amid speculation yen gains won last week following two rounds of intervention can be maintained.

The gap between US and Japanese rates is unchanged and the cost for the BoJ and Ministry of Finance will become increasingly expensive. Against a positive risk backdrop, the AUD and NZD are up, while the euro pushed above 1.0750 and the GBP consolidated a break back above 1.25. Our attention turns now to the RBA policy update today ahead of the Bank of England policy meeting on Thursday as key markers guiding direction through a week that is otherwise absent of headline data points.

Expected Ranges

  • NZD/USD: 0.5920 - 0.6080 ▲
  • NZD/EUR: 0.5520 - 0.5620 ▼
  • GBP/NZD: 2.0800 - 2.1100 ▲
  • NZD/AUD: 0.9020 - 0.9120 ▼
  • NZD/CAD: 0.8150 - 0.8250 ▼

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.