Home Daily Commentaries NZD recovers weeks early losses on heels of weaker USD

NZD recovers weeks early losses on heels of weaker USD

Daily Currency Update

The New Zealand dollar advance through trade on Tuesday, climbing back through US$0.62 as markets looked to unwind US dollar gains won through trade on Monday. With little domestic macro data on hand to drive direction, the NZD tracked within a narrow bank through much of the domestic session bouncing between US$0.6180 and US$0.62. Despite a slew of US earnings data price action was largely muted overnight with equities and treasuries flat. Markets looked to unwind Monday’s USD gains allowing the NZD to extend its recovery back through US$0.62 overnight. Having marked intraday highs just short of US$0.6225 the NZD retreated into the morning’s close and now currently buys US$0.6205 with the little net movement against major crosses.
With little note on the macroeconomic ticket, we anticipate the NZD will again track within recent ranges ahead of tomorrow morning's all-important quarterly CPI print. With inflation pressures stubbornly sticky another elevated inflation print will elevate calls for further monetary policy tightening at a time when there are growing calls to suggest the RBNZ has stifled economic growth by moving too aggressively.

Key Movers

Despite a slew of economic data and earnings reports price action across equities, treasuries and major currencies was largely muted through trade on Tuesday. The US dollar retreated on the day as investors sought to unwind Monday’s rally, allowing key major counterparts to rally back toward Friday highs. The euro has pushed back toward US$1.0980 while the GBP eyed a break back above US$1.2450 and the yen forced the dollar back below ¥134.50 and ¥134.00. Our attentions turn to UK CPI data as the only major release. We anticipate a further moderation in price pressures, in particular a correction in core inflation back toward 6% y/y. If price pressures prove sticky the GBP may find support as calls for tighter Bank of England monetary policy gather momentum.

Expected Ranges

  • NZD/USD: 0.6150 - 0.6280 ▲
  • NZD/EUR: 0.5620 - 0.5720 ▲
  • GBP/NZD: 1.9880 - 2.0120 ▲
  • NZD/AUD: 0.9180 - 0.9280 ▼
  • NZD/CAD: 0.8250 - 0.8350 ▲