Home Daily Commentaries Positive risk backdrop helps NZD outperform as focus turns to US election

Positive risk backdrop helps NZD outperform as focus turns to US election

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.

| Wednesday 6 November, 2024

Daily Currency Update

The New Zealand dollar advanced through trade on Monday, buoyed by a positive risk backdrop and softer USD. With little of note on the domestic ticket the NZD tracked within a narrow range for much of the local session before finding support and climbing off lows near US$0.5965 to test a break above US$0.60. While the USD enjoyed some support from stronger ISM services data, gains were short-lived and the positive risk trend that lifted equities and risk assets through early trade carried the day and helped propel the NZD higher. Having touched intraday highs just shy of US$0.6010 the NZD now trades between US$0.5990 and US$0.6010.

Our attention now turns to the US election. The first polls will close around 10 AM AEDT and an election result will be unlikely before the close of business. With the hotly contested race, we expect whippy trades as votes are counted. A Trump win would add downward pressure on the NZD and likely consolidate a break below US$0.60 while a Harris victory could help spark an extended recovery toward US$0.61/62.

Key Movers

The US dollar retreated against a positive risk backdrop as Americans hit polling stations on Tuesday. The DXY dollar index gave up nearly half a percent and was lower against all 10 major currencies. The euro and the GBP advanced 0.5% while the yen enjoyed modest gains too, up 0.4% for the day. US ISM data supported a narrative of US economic strength, helping lift US treasury yields and dispel fears of recession. With equities and risk assets rallying our attention now turns to the US election. The first polls will close around 10 AM AEDT and an election result will be unlikely before the close of business. Polls leading into the election suggest an extremely close race with the outcome hinging on just a handful of critical battleground states. We expect price action to remain whippy throughout the count as markets respond and adjust expectations as votes pour in.

Expected Ranges

  • NZD/USD: 0.5950 - 0.6050 ▲
  • NZD/EUR: 0.5450 - 0.5550 ▲
  • GBP/NZD: 2.1600 - 2.1800 ▲
  • NZD/AUD: 0.9000 - 0.9100 ▼
  • NZD/CAD: 0.8250 - 0.8350 ▼

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.