Home Daily Commentaries NZD well contained as focus turns to RBNZ

NZD well contained as focus turns to RBNZ

Daily Currency Update

The New Zealand dollar traded within a tight range on Tuesday, tracking between US$0.6110 and US$0.6130 as markets square positions leading into the RBNZ policy update this morning and a critical US inflation update Thursday. We are keenly attuned to any shift in RBNZ's stance and policy. Growing calls for policy makers to acknowledge the poor state of the economy and pair back suggestions it may indeed raise rates again. A string of softer macro data sets led by the latest PMI and PSI reports indicate there is little room for the economy to absorb a further tightening of monetary policy conditions with another dip into recession more than likely through the coming 6-9 months. While it is unlikely policy makers will amend rates markets are looking for a dovish pivot in support of rebuilding activity. All in we expect the market will be disappointed with policy makers seemingly fixed on bringing inflation back to target ahead of reviving activity.

Key Movers

Price action was well contained through trade on Tuesday with majors operating within a narrow range against the USD as investors square positions leading into tomorrow’s all-important US CPI inflation update. Markets largely ignored commentary from Fed Chari Jerome Powell as he addressed a senate committee hearing on monetary policy. Powell was not prepared to give any clear guidance as to the time and trajectory of potential rate cuts and as such market pricing for a July adjustment reflects expectations that a cut is highly unlikely. Instead, we look to September as the first realistic Fed meeting wherein a rate cut is in play. Before then we have 3 inflation prints and 2 labour market updates. These will prove key in shaping expectations and will drive near-term direction across majors. US yields were higher across the curve with both 10 and 2 year rates edging upward, helping prop up the USD and add pressure on the Yen. The Japanese yen was the worst-performing major unit giving up three-tenths of a percent, allowing the USD to break back above ¥161.30 and mark highs at ¥161.31. the euro held on above US$1.08 and bounced between US$1.0805 and US$1.0835 while the British pound edged below US$1.28 marking session lows at US$1.2778.
Our attention now turns to the RBNZ policy meeting and rate update ahead of commentary from Bank of England and European Central Bank officials and Powell’s 2nd day of testimony in front of the Senate committee.

Expected Ranges

  • NZD/USD: 0.6050 - 0.6180 ▲
  • NZD/EUR: 0.5600 - 0.5700 ▲
  • GBP/NZD: 2.0700 - 2.1000 ▼
  • NZD/AUD: 0.9020 - 0.9150 ▲
  • NZD/CAD: 0.8300 - 0.8400 ▲

Written by

Matt Richardson


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.