NZD - New Zealand Dollar
The New Zealand dollar offered little to excite investors through trade on Tuesday, tracking sideways through much of the session and struggling to extend beyond 0.72 US cents. Investors appear content to maintain a holding pattern, largely ignoring softness across US data sets and concerns surrounding Europe’s vaccination roll out. Milk prices corrected while domestic rates tracked downward adding some downside pressure to the NZD. Having touched intraday lows at 0.7170 the NZD currently buys 0.7178 US cents.
We anticipate another quiet session today as the local current account deficit is expected to be in line with recent averages. Instead, our attentions turn to this evening’s Federal Reserve and FOMC policy announcement.
The dollar index was flat through trade on Tuesday despite softness across domestic retail sales, industrial production and housing data. Consumer spending in February fell over 3%, a sharp correction off the huge surge seen in January, as wild weather and harsh winter storms forced Americans to stay at home, perhaps a good thing as the country still struggles to control the spread of COVID-19. Investors instead latched on to expectations for growth as stimulus checks began arriving at households across America.
The euro tracked below 1.19 as Europe’s vaccination roll out remains in disarray with 16 countries now suspending the AstraZeneca vaccine from their roll-out schedule. Authorities remain adamant the benefits continue to outweigh the risks as Italy and Germany are forced to introduce new social distancing measures in a bid to curtail fresh outbreaks.
With little of note to drive direction ahead of this evening’s FOMC policy announcement we expect price action to remain muted. While we anticipate the Fed will maintain the current narrative, with forecast pricing in an accommodative and neutral interest rate setting into December 2023, recent price action across bond markets and treasury yields coupled with fiscal lead growth expectations could see the timing of future rate hikes bought forward.
0.7105 - 0.7220 ▼NZD/EUR:
0.6010 - 0.6090 ▲GBP/NZD:
1.9180 - 1.9520 ▲NZD/AUD:
0.9260 - 0.9350 ▼NZD/CAD:
0.8880 - 0.8990 ▼