New Year, same old story; Rocky start to 2025 for NZD
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Daily Currency Update
The New Zealand dollar has enjoyed a rocky start to 2025, marking a series of lower lows, culminating in a four year low on Friday. Stronger than expected US non-farm payroll numbers and a decline in the underlying US unemployment rate forced investors to wind back expectations for Fed rate pricing through 2025 propelling the NZD below US0.56 and toward US$0.5550. A paring of US rate cut bets, the threat of a new US/China trade and a domestic recession have forced investors away from the NZD driving the currency to its lowest level since April 2020 when it was recovering off of the lows seen in the first month of the Pandemic. As we move toward President Elect Trump’s inauguration on January 20th we expect the NZD will face extended headwinds. Should Trump deliver on his election promises and re-ignite the US/China trade war, pushing a punishing tariff program then we could see the NZD slump below US$0.55 testing lows not seen through the last 10 years.Our attentions today turn to China trade data ahead of NZ building numbers, CPI indicators, employment data and Manufacturing PMI’s as headline items on the week's agenda.
Key Movers
The US dollar outperformed again through Friday trade following stronger than expected December non-farm payroll numbers. The unemployment rate fell back to 4.1% as 223,000 new jobs were added to the economy through the Festive season, a read well above consensus estimates. The strong read drove rate cut expectations back, with the first full rate cut for 2025 now not expected until at least September. With US treasuries surging the dollar advances against all major counterparts with he exception of the Yen. The Yen rallied following a report indicating the Bank of Japan will lift its inflation forecasts raising expectations they will follow through with a rate hike later this month. While commodity currencies remain on the back foot the British Pound was the worst performing major last week down nearly 2%.Our attention this week turn to UK CPI on Wednesday ahead of US Senate confirmation hearings Fed commentary and US retail sales data.
Expected Ranges
- NZD/USD: 0.5500 - 0.5650 ▼
- NZD/EUR: 0.5380 - 0.5520 ▲
- GBP/NZD: 2.1800 - 2.2200 ▼
- NZD/AUD: 0.8980 - 0.9120 ▲
- NZD/CAD: 0.7930 - 0.8130 ▼