Home Daily Commentaries NZD underperforms as focus turns to the ECB

NZD underperforms as focus turns to the ECB

Daily Currency Update

The New Zealand dollar underperformed through trade on Wednesday, unable to take advantage of USD weakness through the domestic session and extending losses through overnight trade. While the first Harris/Trump presidential debate had little impact on currency markets, a surprise uptick in US inflation pressure drove US yields higher. The NZD slipped below US$0.6150, testing supports at US$0.61 before settling near US$0.6135 leading into the daily close. Having relinquished ground to the USD, the NZD is weaker against all key crosses as well, sliding below 0.92 against the AUD while trading as lows as 86.3 against the yen.

Our attentions now turn to domestic select price indicators which will help shape Q3 inflation forecasts. The European Central Bank policy meeting and US PPI number dominate the offshore ticket.

Key Movers

The USD dollar showed little net movement through trade on Wednesday as investors offered scant reaction to the first Harris/Trump US presidential debate. Snap polls taken in the aftermath seemed to conclusively declare Harris the winner of the debate, with polling odds tipping 5 points in Harris’s favour. Instead, attentions turned toward US CPI data, and while focus has shifted over recent weeks to place greater emphasis on labour market performance, the surprise uptick in price pressures helped lift US treasury yields to close higher on the day.

In other news, the yen trade was choppy after Bank of Japan board member, Junko Nakagawa suggested the current level of real rates is extremely low and monetary policy will need to be adjusted if expectations for inflation are realised. The comments supported expectations for tighter policy conditions and helps lift the yen and drive the USD toward 140.70 before US CPI numbers helped fuel a break back toward 142. The pound tested supports at 1.30 while the euro gave up 1.1050 to test 1.10.

Our attentions now turn to the European Central Bank policy meeting, where we expect rates will be cut by 25 basis points. We are keenly attuned to any commentary that may offer insight into the timing and trajectory of future rate adjustments. US jobless claims and PPI data, a key marker for the PCE deflator round out the macro docket.

Expected Ranges

  • NZD/USD: 0.6080 - 0.6200 ▼
  • NZD/EUR: 0.5480 - 0.5620 ▼
  • GBP/NZD: 2.1150 - 2.1450 ▼
  • NZD/AUD: 0.9150 - 0.9250 ▼
  • NZD/CAD: 0.8280 - 0.8400 ▼

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.