NZD range-bound as markets sideline major bets amid ongoing global trade uncertainty
Written by
Daily Currency Update
The New Zealand dollar climbed through trade on Monday, advancing on the heels of a weaker US dollar and stronger Chinese activity data. Having opened below US$0.5880, the NZD advanced through the domestic session as markets reacted to Moody’s late Friday downgrade of the US government's credit rating. Treasury yields fell as the curve steepened, forcing the dollar lower, amid a risk-off tone.Having pushed above US$0.59, the NZD found added support in stronger Chinese monthly activity data. Industrial Production expanded through the 12 months to May, showing remarkable resilience to recent trade tensions. After touching intraday highs above US$0.5930, the NZD paired back toward US$0.5920, leading into this morning's open.
With little of note on today’s domestic ticket, our attention shifts to the RBA policy meeting and Canadian CPI data as markers headlining the macro ticket, while ongoing trade tensions and the underlying risk narrative control direction.
Key Movers
Price action across major currencies was languid through trade on Monday amid an absence of topline data and headline news flow. The US dollar fell during early Australasian trade as markets responded to Moody’s downgrading of the US government credit rating. A risk-off tone forced the USD lower, allowing commodity currencies to advance. With the DXY on the back foot, risk sentiment rebounded overnight, enabling the dollar to recover losses and bounce off session lows.Comments from Fed officials that suggested a rate cut may not be offered until September did little to move markets, while a trade deal between the EU and UK helped prop up both the euro and pound. EU officials consented to reduce obstacles for UK food exports in exchange for an extension of access to UK fishing waters. Additionally, they agreed to facilitate EU defence spending with UK manufacturers, a significant concession because negotiations between Trump, Zelenskyy, and Putin appeared to go nowhere on Monday.
The euro pushed back above 1.12, marking session highs at 1.1280 before settling near 1.1230, while the GBP edged higher.
Expected Ranges
- NZD/USD: 0.5880 - 0.5950 ▲
- NZD/EUR: 0.5200 - 0.5300 ▲
- GBP/NZD: 2.2300 - 2.2700 ▼
- NZD/AUD: 0.9120 - 0.9220 ▲
- NZD/CAD: 0.8200 - 0.8320 ▲