Home Daily Commentaries NZD slides as risk off mood engulfs market

NZD slides as risk off mood engulfs market

Daily Currency Update

The New Zealand dollar underperformed through trade on Tuesday sliding back below US$0.6150 amid a broader risk-off tone. With markets closed in observance of ANZAC day, liquidity and volumes were thinner than normal through the domestic session. A risk-off mood engulfed markets and equities across the region fell, while the NZD slid lower. Losses were then compounded overnight as poor earning data from UBS, Santander and embattled US bank First Republic elevated fears a broader banking crisis could resurface. With the USD firmer amid the risk-off backdrop the NZD marked session lows at US$0.6135 before finding support.
Our attention today turns to local trade balance data for March. We expect a continued decline and record annual deficit, while Australian CPI data, German consumer confidence and US durable goods orders dominate the offshore ticket.

Key Movers

The US dollar firmed through trade on Tuesday amid a risk-off backdrop. The dollar index climbed 0.5%, while the euro slipped back below US$1.10 and the pound gave up £1.25. Global equities remained on the back foot through the day as disappointing earnings results from European banks UBS and Santander, compounded concerns surrounding US bank First Republic. First Republic released Q1 results and while markets had priced a poor performance, deposit outflows were even larger than anticipated. With no presentation or guidance offered with the results, markets assumed the worse driving equities and risk assets lower. With the VIX volatility index climbing the JPY outperformed, emboldened by the risk-off mood.
Our attentions turn now to German Consumer confidence and US durable goods orders ahead of key euro area GDP, US employment and inflation data and the Bank of Japan’s latest policy meeting.

Expected Ranges

  • NZD/USD: 0.6080 - 0.6230 ▼
  • NZD/EUR: 0.5530 - 0.5630 ▲
  • GBP/NZD: 1.9980 - 2.0320 ▼
  • NZD/AUD: 0.9180 - 0.9320 ▲
  • NZD/CAD: 0.8320 - 0.8420 ▲