Home Daily Commentaries NZD underperforms as USD continues to reap benefits of post-election rally

NZD underperforms as USD continues to reap benefits of post-election rally

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 13 November, 2024

Daily Currency Update

The New Zealand dollar continues to underperform as the US dollar enjoys an extended post-election upturn. The NZD slid below US$0.59500, marking its lowest level in near 3 months, touching US$0.5910. The US dollar continues to make broad based gains against all major counterparts. While equities lost some of the post-election momentum through trade on Tuesday the dollar and treasury yields did not. We expect the NZD will face extensive headwinds through coming weeks and months as markets adjust to the realities of a Trump Presidency. Hopes of a move back toward September highs have all but evaporated and we expect the NZD will struggle on moves approaching US$0.60. Our attentions today turn to US CPI inflation data for October while the Trump narrative will continue driving underlying market momentum.

Key Movers

The US dollar rally continued through trade on Tuesday with the DXY index up four tenths of a percent, breaking through 106 and marking a fresh 6 month high. US treasury yields surged, and the dollar followed suit as markets continue to back the world’s base currency following Trump’s re-election last week. With the USD on the front foot, the Yen gave up 0.66% while the Euro and GBP both suffered heavy losses. Sterling tumbled 1% on the day despite UK wage data printing largely in line with expectations and forcing markets to adjust BoE rate cut expectations. The Pound slid below 1.2750, marking session lows at 1.2727 while the Euro gave up 1.06 and set a new 2024 low at 1.0597. The question now is how far the rally can run. With US treasury yields surging 14 basis points to touch 4.44% overnight markets are now eyeing a breakthrough 4.5%. If yields extend to and through this tipping point, there is scope to suggest this bullish run has plenty of upside left. USD long positions are not yet in overbought territory and our attentions turn no to US CPI data for October as the ley macro marker leading direction through the next 24 hours.

Expected Ranges

  • NZD/USD: 0.5880 - 0.5980 ▼
  • NZD/EUR: 0.5520 - 0.5620 ▼
  • GBP/NZD: 2.1400 - 2.1600 ▼
  • NZD/AUD: 0.9020 - 0.9120 ▼
  • NZD/CAD: 0.8220 - 0.8320 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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