Home Daily Commentaries NZD bounces off Fresh lows, stabilising ahead of key US labour market data

NZD bounces off Fresh lows, stabilising ahead of key US labour market data

Daily Currency Update

The New Zealand dollar opens in much the same position today as it did Wednesday as price action across major currencies calmed following Tuesday’s tumultuous overnight session. Having marked intraday and fresh year-to-date lows below US$0.61 at US$.6085 the NZD recovered through overnight trade, clawing its way back above US$0.6105 and opening at US$0.6111. With most majors giving up ground or stabilising against the USD, there has been barely notable movement against key crosses with the NZD buying 0.9270 AUD, 0.5160 GBP and 0.5795 Euro.

Our focus turns now to Domestic card transactions as a key marker of consumer confidence and spending. While there is some uncertainty of how numbers fared in February, given back-to-back natural disasters a soft read could add more weight behind calls for the RBNZ to pause its current tightening cycle. Anything short of a significant miss on expectations will likely have little impact on NZD direction as attentions remain on US rate expectations. US non-farm payroll numbers, due Friday, remain the key big ticket item driving direction into the weekly close.

Key Movers

The Canadian dollar was the worst major performer Wednesday, giving up more ground to the USD after the Bank of Canada elected to pause its tightening cycle and maintain a 4.5% cash rate. The BoC is the first major central bank to push back additional rate hikes, preferring to allow the string of past rate adjustments to filter through to the real economy. With macro data suggesting inflation will correct back toward 3% by the middle of the year, the policymakers are content in assessing conditions in a bid to cushion any potential economic downturn. With the CAD under pressure, the USD pushed toward 1.38, its highest level since October last year.

Outside the CAD price action across major currencies has been relatively modest as investors take stock and consolidate following Tuesday’s elevated volatility. With little new guidance offered by Jerome Powell as he fronted the Senate Panel on Monetary policy for a second day, markets seemed content in squaring positions and preparing for Friday’s all important Non -Farm Payroll print. With second-tier labour market data printing above expectations, another robust labour market update ahead of key inflation data due next week could see the USD extend gains and compound losses across key majors, namely the Euro and GBP.

Expected Ranges

  • NZD/USD: 0.6050 - 0.6220 ▼
  • NZD/EUR: 0.5750 - 0.5850 ▲
  • GBP/NZD: 1.9280 - 1.9520 ▼
  • NZD/AUD: 0.9220 - 0.9320 ▼
  • NZD/CAD: 0.8380 - 0.8480 ▲