New Zealand dollar drops on tariffs
Daily Currency Update
The NZD started higher after the Trump inauguration reaching a high of US$0.5690 with hopes that there may be tariff relief however, it became apparent that this would be short-lived as Trump mentioned he may enact tariffs on Canada and Mexico at a rate of 25% starting from Feb 1. The New Zealand dollar immediately fell to US$0.5623. The NZD gained 0.7% versus the Mexican peso and Canadian dollar almost immediately. The NZD firmed up to current levels of US$0.6573 this morning.China has avoided the early round of tariffs and has said to have vowed to buy more US goods.
Key Movers
USD/CAD has had the most volatility thus far after tariffs will be introduced on Feb 1st against Canada. USD/CAD fell from a high of CA$1.448 to a low of CA$1.4263 before the inauguration only to rebound post-tariff announcement to a high of CA$1.4518 only to slowly subside to current CA$1.4325. The yen’s strength has continued where the USD/JPY touched a fresh low of ¥154.78.Gold continued its strong run hitting a 2-month high and looks poised to test recent all-time highs while oil has continued to slide in the futures markets.
Broadly the USD has continued to decline since the start of the week along with US treasuries.
Trump has announced numerous reforms sweeping across energy, oil, immigration, government and defence, adding volatility to several stocks and commodities including pushing our local stock market higher. Trump is back and so is volatility.
News today:
NZ - GDT Price Index, CPI
AU – MI Leading Index
UK – Public Sector Net Borrowing, BOE Quarterly Bulletin
CA – IPPI, RMPI
US – Leading Index
EU – ECB Lagarde Speech
Expected Ranges
- NZD/USD: 0.5560 - 0.5750 ▲
- NZD/EUR: 0.5400 - 0.5500 ▲
- GBP/NZD: 2.16900 - 2.1900 ▼
- NZD/AUD: 0.89800 - 0.9080 ▲
- NZD/CAD: 0.8040 - 0.8200 ▲