New Zealand dollar unable to capitalise on USD’s soft start to the week
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Daily Currency Update
The New Zealand dollar traded marginally higher on Monday, benefiting from a softer US dollar, before retracing gains on growing expectations of an RBNZ rate cut. The NZD rallied early following reports at the weekend that Scott Bessent has been chosen as US Treasury Secretary. After a series of left field appointments, market uncertainty was somewhat tempered by the Bessent appointment. Seen as a safe and pragmatic pair of hands, Bessent is expected to adopt a more measured approach to global trade and tariffs.Having traded back toward US$0.59, the NZD tracked back toward US$0.5840, sitting only marginally above Friday’s close this morning. Domestic retails sales fell 0.1% in the September quarter and while ahead of market estimates, marked another contraction in retail performance and an early indicator suggesting another poor GDP read. Yields moved sharply lower in response as markets move to price a 50-point RBNZ rate cut later this week.
Key Movers
The US dollar traded lower to start the week as market attentions remain affixed to US political appointments. Reports Scott Bessent will be appointed US Treasury Secretary helped assuage building market concern surrounding the impact of a Trump 2.0 Presidency. Bessent is seen as a pragmatic and orthodox choice, with extensive market knowledge and one that will not launch headlong into a trade war, instead promoting market stability and domestic growth. In his first address since the appointment, Bessent said his priority will be to deliver on Trump's proposed tax cuts while lowering the fiscal deficit, controlling inflation and adopting a gradual approach to tariffs.Equities advanced, while treasury yields and the US dollar retreated in response. The euro, GBP and yen all rallied early before losing traction and retracing gains through the latter half of the overnight session. Our attentions turn now to US home sales and consumer confidence data in what is otherwise a quiet macroeconomic ticket.
Expected Ranges
- NZD/USD: 0.5800 - 0.5920 ▼
- NZD/EUR: 0.5520 - 0.5620 ▼
- GBP/NZD: 2.1200 - 2.1500 ▲
- NZD/AUD: 0.8950 - 0.9050 ▼
- NZD/CAD: 0.8120 - 0.8220 ▲