NZD unable to take advantage of easing US inflation
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Daily Currency Update
The New Zealand dollar underperformed on Wednesday when compared with other key majors, unable to take advantage of a weakening USD amid ongoing US/China tariff uncertainty. The two-day trade negotiations between the US and China concluded overnight, but offered little to alleviate ongoing trade reservations. Officials confirmed a framework had been established to implement the agreement founded in Geneva. In short, both sides agreed with what was already agreed last month. The absence of any new progress in negotiations disappointed markets and weighed on the NZD, capping gains and ensuring it continues to track within a narrow trading handle. The NZD opens this morning near US$0.6040. With other majors better able to take advantage of USD softness, the NZD is softer against the euro, GBP and JPY, sliding towards 0.5250 euro, 0.4450 pence and 82.70 yen.Today, our attentions turn to consumer spending, with NZ card transactions data the only headline item on the domestic ticket. UK GDP and PPI reports and US jobless claims round out the macroeconomic agenda.
Key Movers
The US dollar opened lower this morning after softer CPI inflation data and a seeming lack of progress in US/China trade talks. The two-day trade negotiations in London concluded overnight with limited progress toward easing trade tensions. However, softer CPI data and reduced risk appetite suggest that the inflationary impact of Trump’s tariff agenda may be less severe than initially feared. Inflation through May was weaker than expected, climbing just 0.1% which is well short of the 0.3% jump markets had anticipated. There's growing evidence that President Trump's broader policy agenda is offsetting the inflationary pressures generated by tariffs. Uncertainty and a disdain for the current America First mantra has forced prices across key services lower, particularly tourism. US treasury yields fell in the wake of the inflation report, prompting markets to price in two full rate cuts through year-end. With the USD on the back foot the euro and GBP enjoyed strong gains, the with euro pushing above 1.15 while Sterling recaptured 1.3550 and the yen found support against the lower rates backdrop.Our attentions turn now to UK GDP and PPI data, with US jobless claims rounding out the macro agenda.
Expected Ranges
- NZD/USD: 0.5980 - 0.6080 ▼
- NZD/EUR: 0.5200 - 0.5300 ▼
- GBP/NZD: 2.2250 - 2.2500 ▲
- NZD/AUD: 0.9230 - 0.9320 ▼
- NZD/CAD: 0.8200 - 0.8300 ▼