NZD tracks lower as USD jumps amid receding fears for default
Friday 19 May, 2023
Daily Currency UpdateThe NZD tracked lower through trade on Thursday, hobbled by a broadly stronger USD. The NZD offered little in response to the government budget despite confirmation of further deterioration in fiscal accounts and weaker economic activity. With fiscal spending expected to remain in deficit, NZ rates shot higher as the likelihood of further RBNZ rate hikes increases. Having tracked sideways through the domestic session the NZD gave up US$0.6250, drifting toward intraday lows just above US$0.62 overnight. Fears of US Government default receded Thursday after House Speaker McCarthy suggested an agreement, at least in principle, could be reached as soon as this weekend. The increased confidence helped fuel USD gains, while Hawkish comments from Dallas Fed President Logan fueled a surge in US yields and rate expectations as she suggested the data did not yet justify a pause in the tightening cycle. With the USD on the front foot and most majors tracking lower there is little movement when valued against key crosses, and the NZD hit US$0.6204 before finding support and opening this morning buying US$0.6225. Our attentions today turn to Japan CPI data, UK consumer confidence, and US Fed commentary as key markers steering direction into the weekly close.
Key MoversThe USD outperformed all majors through trade on Thursday as forces combined to propel yields and the currency higher. Fears of Government default eased following positive commentary from House Speaker McCarthy and White House Representatives wherein it was suggested a deal could be struck by weeks end. US jobless claims fell larger than anticipated, yet reports of fraudulent claims in Kentucky and Massachusetts cloud the quality of the data and do little to suggest any change to a softening trend. The combination of receding default fears, US jobless claims, and Hawkish Fed commentary helped fuel a rise in US yields, carrying the USD higher against all majors. With all units giving up near 0.5% against the USD there is little to report in the way of movement in key crosses and our attentions turn now to commentary from key Fed speakers Williams and Powell, while former Fed President Ben Bernanke hits the wires, and Japan CPI and UK consumer sentiment dominate the macro ticket.
- NZD/USD: 0.6180 - 0.6280 ▼
- NZD/EUR: 0.5730 - 0.5830 ▲
- GBP/NZD: 1.9820 - 2.0080 ▼
- NZD/AUD: 0.9350 - 0.9450 ▲
- NZD/CAD: 0.8350 - 0.8450 ▲