NZD outperforms as markets revise growth expectations
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Daily Currency Update
The New Zealand dollar outperformed Tuesday, emboldened by the improvement in US/China trade relations. Having fallen through trade on Monday the NZD set about recouping losses, bouncing off intraday day lows below US$0.5850 and pushing back through US$0.59 stopping just short of US$0.5950. With other majors unable to keep pace with the NZD the currency enjoyed gains against other key crosses, up against the euro, GBP, and yen. Since the joint announcement on tariffs, further concessions have been made with the US reducing taxes on low-value parcels from China while China lifted restrictions imposed on its Airlines, allowing US airplane manufacturers to complete delivery on orders. The abrupt shift in relations has prompted investors to revise growth expectations with the likelihood of a US recession now reduced. With little of note on today’s macroeconomic calendar, our attention remains on tariff headlines.Key Movers
The US dollar underperformed Tuesday, relinquishing Monday’s upswing, and losing ground against all G10 counterparts. The DXY index fell nearly 1% as commodity currencies outperformed. US and China growth expectations have been revised higher in response to the 90-day moratorium on tariffs, fueling an extended uptick across risk assets. Equities extended Monday’s gains while a marginal downside surprise in US inflation data was largely ignored. Fed rate cut expectations are little changed with markets pricing a 52-basis point adjustment into year-end, down from 56 points before the print. With the USD on the back foot, the euro pushed back above 1.11 to mark session highs just short of 1.12 while the pound pushed above 1.33 and the yen forced the dollar back below 147.50. With little of note on today’s macroeconomic agenda, our attention remains on tariff headlines. Any signal of further thawing in tensions should help bolster the uptick in risk sentiment.Expected Ranges
- NZD/USD: 0.5850 - 0.5990 ▲
- NZD/EUR: 0.5250 - 0.5350 ▲
- GBP/NZD: 2.2200 - 2.2600 ▼
- NZD/AUD: 0.9150 - 0.9250 ▼
- NZD/CAD: 0.8180 - 0.8320 ▲