NZD upswing fades as risk aversion rises
Daily Currency Update
The New Zealand dollar weekend into the close on Friday sliding back below US$0.5750 amid a risk off shift. Having touched highs above US$0.5770 the NZD slid back toward US$0.5730 as uncertainty surrounding the Trump administration's economic policies and a sell off across US equities sparked a sharp uptick in risk aversions. With risk assets on the back foot, the NZD also gave up ground to the Euro and GBP while relinquishing nearly 1% to the Yen. Friday’s correction saw the NZD give up near half the gains won through earlier in the week, forcing it back toward the middle of the pack when measured against other majors across the week.Our attentions turn now to domestic retail sales data ahead of US consumer sentiment and Germany IFO business data, while geopolitical developments and US trade policy drive wider market sentiments.
Key Movers
The US dollar ended the week higher amid a risk off tone that engulfed markets leading into the weekly close. Having fallen following weaker than anticipated services PMI data wherein activity fell to its lowest level since January 2023 the USD faced added pressures in a softer consumer sentiment print before a sharp sell across equity markets and increasing risk aversion generated by growing political uncertainty fueled risk aversion leading into the weekly close. Doubt and indecision surrounding the Trump administration's economic policies have weighed on investors, businesses, and consumers alike. The Japanese Yen was the only major to out perform the USD, buoyed by the risk of pivot and a surge in domestic bond yields. The British Pound slipped back below 1.2650 while the Euro gave up 1.05 and 1.0450 before a strong opening this morning. The Euro has bounced back toward 1.05 on open amid reports Friedrich Merz will likely be the next Chancellor of Germany.Our attentions today remain with the German election as the outcome is still too close to call and Merz CDU/CSU alliance will likely need to draw in other minor parties to form a coalition if it is expected to foster a majority. On the macro front, German IfO business data and expectations are released while the US Conference Board releases more consumer data.
Expected Ranges
- NZD/USD: 0.5680 - 0.5780 ▼
- NZD/EUR: 0.5420 - 0.5520 ▲
- GBP/NZD: 2.1900 - 2.2200 ▲
- NZD/AUD: 0.8950 - 0.9050 ▲
- NZD/CAD: 0.8080 - 0.8220 ▲