Home Daily Commentaries NZD outperforms, finding support in the promise of China Stimulus

NZD outperforms, finding support in the promise of China Stimulus

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.

| Tuesday 10 December, 2024

Daily Currency Update

The New Zealand dollar outperformed through trade on Tuesday, buoyed by an announcement from China’s Politburo. Having started the day on the back foot, the NZD slid toward US$0.58 and clearly remained out of favour leading into the conclusion of China’s Politburo December meeting. The NZD then rallied strongly following comments from officials wherein they signalled a move away from its current prudent monetary policy platform to a “moderately loose” framework, coupled with a more robust fiscal stimulus program.

Policymakers promised to be more proactive and forceful in boosting consumption and shoring up the property market. While short on detail, the announcement afforded investors welcome relief and hope China will be active in supporting the economy and the impacts of Trump tariffs. The Chinese yuan lurched upward following the announcement, dragging the NZD back through US$0.5850 to mark intraday highs at US$0.5880.

With little of note on today’s domestic docket, our attention turns to the RBA policy meeting and China trade data for direction.

Key Movers

The Chinese yuan was the day's big mover, surging following an announcement made after its December Politburo meeting. While short on detail, a promise of increased fiscal stimulus and looser monetary policy helped bolster confidence China officials will work to counter the impacts of Trump tariffs and push for a rebound in growth. Having slipped to 7.29 leading into the announcement, the CNY surged back toward 7.26 leading into this morning’s open.

The NZD and AUD were the primary beneficiaries among majors and outperformed all other counterparts, while the yen underperformed, giving up 151 against the USD. With US treasury yields climbing, the euro and GBP tracked largely sideways. Our attention turns now to China trade data and the US NFIB Small Business Survey ahead of Wednesday’s all-important US CPI inflation update and Thursday’s ECB policy meeting and rate statement.

Expected Ranges

  • NZD/USD: 0.5780 - 0.5930 ▲
  • NZD/EUR: 0.5500 - 0.5600 ▲
  • GBP/NZD: 2.1500 - 2.2000 ▼
  • NZD/AUD: 0.9050 - 0.9150 ▼
  • NZD/CAD: 0.8220 - 0.8350 ▲

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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