Home Daily Commentaries NZD slides on China woes

NZD slides on China woes

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Friday 9 February, 2024

Daily Currency Update

The New Zealand dollar underperformed through trade on Thursday, sliding back below US$0.61 amidst a stronger USD and spillover effects from a weaker Chinese yuan. Another set of lackluster China economic news dampened demand for the CNY and CNH and weighed on the NZD as China worries continue. CPI inflation data showed deflationary pressures worsened in January, down from -0.3% year on year in December to -0.8%. A sharp decline in food prices, tourism and transportation led the decline and while the PBOC acknowledged the economy was working through a critical period of economic transitions, they appeared content in allowing prices to normalise naturally noting, “Supply and Demand is expected to improve ensuring there are no long-term basis for deflation”. The NZD touched intraday lows at US$0.6080 before finding some support and opens this morning nearer US$0.61 at US$0.6095.

With little of note on the domestic docket, our attentions turn offshore to German inflation numbers and US seasonally adjusted inflation data for direction and guidance into the weekly close.

Key Movers

The USD has bucked the trend of the last few days and crept higher on indexed terms with the DXY up 0.1% through trade on Thursday. A steady uptick in US treasury yields followed comments from Fed member Barkin, who added to recent Fed commentary suggesting a patient approach is best and that there is no rush to cut rates and risk inflation emerging again. The comments coupled with a stronger than expected jobless claims report helped lift the USD. With yields rising the JPY was a notable underperformer, dampened by dovish comments from BoJ officials. The euro is little changed as ECB speakers pushed back on market calls for an April rate cut, suggesting policy makers need more time and assurances inflation will not return and is indeed headed toward target before rates can be adjusted. Yields and the expected trajectory of monetary policy continues to dominate direction and we look today to German and US inflation data adjustments for guidance into the weekly close.

Expected Ranges

  • NZD/USD: 0.6050 - 0.6150 ▼
  • NZD/EUR: 0.5600 - 0.5700 ▼
  • GBP/NZD: 2.0600 - 2.0800 ▲
  • NZD/AUD: 0.9320 - 0.9420 ▲
  • NZD/CAD: 0.8170 - 0.8250 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.