Home Daily Commentaries NZD underperforms, dragged downward by its antipodean cousin

NZD underperforms, dragged downward by its antipodean cousin

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.

| Wednesday 21 May, 2025

Daily Currency Update

The New Zealand dollar underperformed Tuesday unable to capitalise on a broadly weaker US dollar. Having tracked sideways through much of the domestic session, the NZD slid below US$0.59, marking intraday lows at US$0.5896. With little domestic data on hand and no headline newsflow driving risk sentiment, the NZD was dragged lower by the AUD after the RBA opted to lower rates by 25 basis points while forecasting a faster-than-anticipated correction in underlying inflation pressures. Overnight USD softness helped the NZD claw back losses and we opened this morning near US$0.5920. When measuring against other majors the NZD is notably weaker against the euro, CAD, JPY, and GBP, yet enjoyed strong gains against the AUD, pushing back above A$0.9230.
Our attentions today turn to domestic trade data, with commentary from Fed officials and UK CPI inflation data headlining the offshore macroeconomic agenda.

Key Movers

Price action across majors was largely tepid Tuesday amid an absence of headline newsflow and top-tier data. An uptick across European and Asian equity indices and a steepening in government bond yield curves helped drive gains for the euro, CHF, JPY, and GBP. In contrast US equities were little changed with markets moving to consolidate gains won through the last month prompting broader USD softness and a 0.4% depreciation in the DXY dollar index. The Canadian dollar also gained after a stronger-than-expected inflation print. Core inflation reached its highest level in more than 12 months prompting markets to pare back expectations for Bank of Canada rate cuts through year end.
UK CPI inflation data headlines another largely quiet macroeconomic docket while geopolitical headlines and US trade negotiations continue to drive the underlying risk narrative.

Expected Ranges

  • NZD/USD: 0.5850 - 0.5980 ▼
  • NZD/EUR: 0.5200 - 0.5320 ▼
  • GBP/NZD: 2.2500 - 2.2800 ▲
  • NZD/AUD: 0.9150 - 0.9280 ▲
  • NZD/CAD: 0.8180 - 0.8280 ▼

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.