Home Daily Commentaries NZD slide continues as US dollar continues to ride coattails of Trump election win

NZD slide continues as US dollar continues to ride coattails of Trump election win

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 12 November, 2024

Daily Currency Update

The New Zealand dollar retreated through trade on Monday as markets extended Friday’s heavy decline. With the USD stronger across the board, the Kiwi offered little resistance, sliding toward intraday lows just above US$0.0.5950 before finding support. The prospect of a second Trump presidency has bolstered expectations for US growth, while lifting inflation estimates, propelling the USD higher against all majors.

With underwhelming China fiscal stimulus measures announced at the weekend and the prospect of weaker global growth amid a backdrop of punishing US tariffs weighing on risk assets and commodities, the near-term outlook for the NZD appears bleak. All things being equal, it is unlikely the NZD will extend back toward US$0.60, let alone US$0.61/62 in the near-term and may struggle to regain and hold these levels at any point through the next 12 months.

With little of note on the domestic ticket, our attention remains with the Trump trade narrative.

Key Movers

The USD dollar outperformed all majors through trade on Monday as markets continue to position themselves for a 2nd Trump presidency. With little of note on the macroeconomic agenda and some markets closed in observance of Remembrance Day, investors were afforded the time to further consider the implications of Trump 2.0. The Trump White House is expected to deliver on key campaign policies designed to bolster US growth while adding inflationary pressures. With all else being equal, we would expect Trump’s America First platform to result in a shallower Fed easing cycle and more robust GDP returns, which, in turn, should propel the USD higher.

The DXY index climbed 0.5% through Monday as the euro, JPY and GBP all fell. The euro was among the worst performers, giving up near 0.65%, while the yen tumbled three quarters of a per cent as rate spreads favoured the US dollar. The question now, where to from here? Is this repositioning rational, and what can we expect moving forward? There is scope to suggest US treasuries could climb back toward 4.5% (currently 4.34%), while the DXY is expected to test new highs on the back of a dampening in risk demand.

We turn our focus today to UK earnings and employment data, the German ZEW survey and commentary from Fed member Waller.

Expected Ranges

  • NZD/USD: 0.5900 - 0.6000 ▼
  • NZD/EUR: 0.5520 - 0.5620 ▲
  • GBP/NZD: 2.1500 - 2.1700 ▼
  • NZD/AUD: 0.9000 - 0.9100 ▼
  • NZD/CAD: 0.8220 - 0.8320 ▲

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.