Home Daily Commentaries NZD under pressure as domestic outlook sours

NZD under pressure as domestic outlook sours

Daily Currency Update

The NZD offered little to excite investors through trade on Monday, maintaining a narrow range, bouncing between US$0.6045 and US$0.6070. With little to note on the domestic docket, US and UK markets closed for Memorial Day and the Summer Bank Holiday, liquidity was thin and price action muted.

Initial market reactions to reports a deal has been struck to suspend the US debt ceiling have been subdued, and while risk appetite has improved, markets appear well positioned for the 11th hour compromise. The NZD is flat against most major counterparts, making little inroads into last week's steep post-RBNZ sell-off.

Having consolidated a break below 0.50 British pence, the NZD tested a move below 0.49 overnight, while struggling to break back above 0.5650 against the euro and slumping toward 0.9250 against the AUD.

With little to note on today’s ticket, our attentions remain on broader risk sentiment. With the US and UK markets returning, we may see a delayed response to the weekend's debt ceiling agreement.

Key Movers

Price action was muted through trade on Monday, with the US, UK, German, Swiss and French markets all closed for bank holidays and Memorial Day long weekends. Liquidity across the day remained thin with so many markets closed. As such, the response to reports a deal has been reached to extend the US debt ceiling, and the reaction across financial markets has been subdued.

The low-key response is indicative of a market anticipating an 11th hour compromise. While the bill must pass Congress before becoming law, it appears both sides have rallied the support needed. Commodity currencies were stronger on the day, while the euro continues to hold onto 1.07 and the GBP tracked between 1.2340 and 1.2370. With global yields lower, the yen outperformed, forcing the USD back toward 140, off intraday highs above 140.50.

With little to note on today’s ticket, we look to returning investors for price action and a delayed reaction to the US debt ceiling agreement, with sentiment expected to drive direction ahead of Friday’s all-important US nonfarm payroll update.

Expected Ranges

  • NZD/USD: 0.6020 - 0.6120 ▲
  • NZD/EUR: 0.5620 - 0.5680 ▲
  • GBP/NZD: 2.0220 - 2.0480 ▼
  • NZD/AUD: 0.9180 - 0.9280 ▼
  • NZD/CAD: 0.8180 - 0.8280 ▼