Home Daily Commentaries NZD buoyed by reports of Chinese Stimulus

NZD buoyed by reports of Chinese Stimulus

Daily Currency Update

The New Zealand dollar moved higher through trade on Monday, buoyed by the promise of Stimulus from key Chinese policymakers. Reports China’s National Development and Reform Commission would remove consumption restrictions and optimise policies to support an ailing property market helped bolster demand for commodity-linked currencies, lifting the NZD back above US$0.62.

The NZD outpaced most major counterparts and despite a broadly stronger USD, closed the day higher. Having touched intraday highs at US$0.6220, the NZD edged marginally lower into this morning’s open and now buys US$0.6210.

With little domestic data on hand, our attention turns to the RBA monetary policy decision. After last week’s softer-than-anticipated Q2 inflation print, most analysts expect the RBA will leave rates on hold while maintaining a tightening bias. With the RBNZ already announcing an end to its tightening cycle, the promise of ongoing RBA rate hikes should put downward pressure on the NZD vs its antipodean counterpart.

Having given up intraday highs near AU$0.9275 the NZD opens this morning at AU$0.9250.

Key Movers

The USD was broadly stronger through trade on Monday, advancing against the euro, GBP and yen while giving up ground against the commodity currencies. Yen weakness helped propel the DXY dollar index higher, up 0.3% on the day. The USD /JPY pushed above 141 and 142, marking intraday highs at 142.50 after the BoJ announced an unscheduled bond purchase operation. The move was designed to cap gains on Japanese Government Bonds and looks like a clear signal that the move following last week's yield curve adjustment has gone far enough.

With the euro slipping back below 1.10 and the GBP giving up 1.2850, our attentions turn to a crowded macroeconomic docket. The RBA monetary policy decisions, US ISM manufacturing data and Jolts Job openings headline the ticket ahead of NZD labour market data and US leading non-farm payroll data Wednesday and the Bank of England monetary policy announcement Thursday, before Friday’s all-important Non-farm payroll print.

With a slew of headline risk events on the horizon, we expect volatility through the back half of the week as markets attempt to juggle growth concerns against near-term monetary policy outcomes.

Expected Ranges

  • NZD/USD: 0.6120 - 0.6250 ▲
  • NZD/EUR: 0.5580 - 0.5680 ▲
  • GBP/NZD: 2.0580 - 2.0880 ▼
  • NZD/AUD: 0.9180 - 0.9280 ▼
  • NZD/CAD: 0.8150 - 0.8250 ▲