NZD consolidates break above US$0.60 as pressure mounts on USD
Daily Currency Update
The New Zealand dollar continues to benefit from a weaker USD as markets extended last week’s post-US CPI sell-off through trade on Monday. The NZD extended a break above US$0.60, marking intraday highs at US$0.6060, before edging lower through overnight trade as technical resistance stifled upward momentum. General USD softness continues to drive direction as markets price in an end to the Fed’s tightening cycle allowing the NZD to claw back losses suffered through September and October.With little of note on today’s macroeconomic ticket, we look to local trade data and the RBA minutes for some colour. With the AUD outpacing the NZD through recent weeks, new guidance on future RBA policy moves could prove key in shaping near-term direction.
Key Movers
The US dollar continued lower through trade on Monday as speculative positioning and a contraction in treasury rates forced investors to extend last week's losses. While mild, the downside surprise in last week's CPI inflation report appears to be the catalyst affording investors confidence to price in an end to Fed tightening and move on pricing in a correction in rates through H2 2024.The USD failed to push back above 150 against the yen as speculative short yen positioning exacerbated the recent slide-off highs near 152, while the euro and GBP held gains won last week as the dollar index gave up another 0.4%. Against the weaker backdrop, the USD also gave up ground against the CNH. The PBOC set a stronger-than-anticipated fix Monday, allowing the yuan to extend toward its highest level since September.
With little of note on today’s docket, we expect price action will settle as markets prepare positions leading into the Thanksgiving extended weekend.
Expected Ranges
- NZD/USD: 0.5920 - 0.6080 ▲
- NZD/EUR: 0.5480 - 0.5580 ▲
- GBP/NZD: 2.0520 - 2.0820 ▼
- NZD/AUD: 0.9150 - 0.9250 ▼
- NZD/CAD: 0.8200 - 0.8350 ▲