NZD gives up hard-fought gains as French political woes dominate the headlines
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Daily Currency Update
The New Zealand dollar fell through trade on Monday as French politics dominated the headlines. The prospect of the French Government collapsing under the weight of a no-confidence vote drove the euro lower and allowed the USD DXY index to lurch higher. The broadly stronger USD forced the NZD to give up much of last week's gains, sliding back below US$0.59, to trade near US$0.5875 at the time of writing.While softening against the USD, the NZD has outperformed other majors edging higher against the euro, AUD and GBP.
Our attention turns now to domestic trade data, while commentary from Fed officials, US JOLTS jobs data and Australian current account numbers round out the macro ticket.
Key Movers
French politics dominated the headlines through Monday, driving the euro lower, while allowing the USD to edge higher. France’s National Assembly remains bitterly divided by this latest budget iteration. Marine Le Penn, leader of the far-right National Rally Party, doubled down on threats to propose a no-confidence vote should their demands for budget change not be met, while the finance minister pushed back announcing “We will not be blackmailed”.After last-minute budget concessions failed to elicit bipartisan support, French Prime Minister Barnier deployed special executive power to force through specific budget components rather than risk a vote. The move amplified discontent within the National Assembly and a no-confidence vote remains firmly in play. Should a vote be tabled, the French Government would collapse, forcing President Macron to appoint a new Prime Minister.
The euro fell steadily through Monday, marking fresh lows just above 1.0460 before finding support. Euro softness spilled into other European majors with the GBP giving up nearly three-quarters of a per cent, sliding below 1.2650. The yen was the only major to outpace the USD, buoyed by comments from the BoJ Governor that hint at a rate hike in the near future. Japanese rates pushed higher after the central bank chief said economic data is on track and would allow a rate adjustment in the near future.
Our attention turns now to commentary from topline Fed officials, JOLTS job data, Australian current account data and NZ terms of trade.
Expected Ranges
- NZD/USD: 0.5800 - 0.5950 ▼
- NZD/EUR: 0.5550 - 0.5650 ▲
- GBP/NZD: 2.1300 - 2.1600 ▼
- NZD/AUD: 0.9020 - 0.9120 ▲
- NZD/CAD: 0.8180 - 0.8320 ▼