NZD range bound
Daily Currency Update
The New Zealand dollar stayed within a tight range most of the day and found support around the 0.5650 level, right up until close of business. Healthy Trade Balance figures coming out at 219m compared to forecast amount of -1363m signaling that NZ Exports are doing quite well, particularly at these lower currency levels. Conversely, ANZ Business Confidence printed a much lower figure at 54.5 compared to the previous reading of 62.3, which is the lowest figure since August last year.Overnight the ECB dropped the Main Refinancing Rate as expected from 3.15% to 2.9%. As a result, the EUR/USD rose from 1.0397 to as high as 1.0467, while NZD/EUR fell from 0.5433 to as low as 0.5408.
Mixed US news overnight with better-than-expected Unemployment Claims, but worse than expected Advance GDP and Advance GDP Index, prevented much trending in the currency. As a result, currency markets continue to trade within ranges.
Key Movers
Yesterday’s FOMC has Jerome Powell stating the Fed may wait and see before deciding on future rate cuts as they will look to see the impacts of Trump’s policies. The Fed will keep an eye out on the impacts of tariffs, immigration, government spending and regulation. Post the Fed decision, futures markets are pricing in only an 18% chance of a cut in the next rate decision in March. Powell stated the US economy is in a good place, however wants to wait on declines in inflation and on any surprise unemployment data.Trump’s policies are also being examined particularly by the EU, where instead of raising tariffs across the bloc there is a chance he may single out certain economies and place tariffs on them. EU members have met up together to discuss the potential risk associated with the Trump administration and mulling over certain industries such as automotive, steel and technology. The EU subsequently have prepared a larger than previous list of retaliatory tariffs and embargos on US goods. The EU has also come together to protect Greenland from being taken over, with France already offering to deploy troops to Greenland.
The BOJ has also decided to end Quantitative Easing and start with Quantitative Tightening to shrink its balance sheet. This marks the end of monetary easing and will lead to normalisation of policy. The move is said to raise shorter term interest rates. The yen continued to strengthen across the majors, with the USD/JPY approaching the most recent lows of sub 154’s again.
Expected Ranges
- NZD/USD: 0.5550 - 0.5700 ▼
- NZD/EUR: 0.5380 - 0.5460 ▼
- GBP/NZD: 2.1850 - 2.2200 ▲
- NZD/AUD: 0.9020 - 0.9150 ▲
- NZD/CAD: 0.8050 - 0.8250 ▲