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NZD tracks sideways as attentions turn to China data
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Daily Currency Update
The New Zealand dollar maintained a narrow range on Thursday, as price action was well contained. Macro data released failed to insight any real momentum in either direction and comments from central bank officials did little to move existing expectations. The NZD edged lower through the domestic session and early offshore trade fell to an overnight low near US$0.5580 before finding some support. The NZD then edged back above US$0.56, but still closed lower on the day, down 0.2%.Direction continues to be driven by US rate expectations, uncertainty surrounding US tariffs and China economic performance. With that in mind, we look to China Q4 GDP numbers later today. We expect an improvement in activity after sluggish numbers through the middle of the year and an annual growth rate just short of the 5% target. A miss will likely weigh on the yuan and could force the NZD below US$0.5550.
Key Movers
The USD dollar maintained a narrow range as comments from Fed policy members offset stronger than expected retail sales data. Consumer spending was solid through December and reinforced sustained US exceptionalism. The dollar enjoyed a brief uptick following the print before Fed member Waller suggested the Fed may move rates sooner than markets expect. US yields fell and the dollar edged lower. Most majors tracked a narrow range with the GBP and euro drifting sideways. The CAD however was a notable underperformer, down near 0.4%, as the looming threat of tariffs continues to cast a pall over Canada’s export market. Some $150billion of Canadian exports could be subject to US imposed tariffs. On the flip side, the JPY lead gains across the board, up 0.8% as Bank of Japan deputy Himino supported a rate hike at next week’s meeting. Overnight, the swap market now has now priced in a 25 point hike for next week, helping the yen force the dollar back below 155.50.Our attentions today turn to China GDP and activity data, UK retail sales, US housing starts and US industrial production data.
Expected Ranges
- NZD/USD: 0.5520 – 0.5640 ▼
- NZD/EUR: 0.5400 – 0.5500 ▼
- GBP/NZD: 2.1500 – 2.1900 ▲
- NZD/AUD: 0.8980 – 0.9050 ▼
- NZD/CAD: 0.8000 – 0.8100 ▲
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