Home Daily Commentaries NZD finally finds some support as USD edges lower

NZD finally finds some support as USD edges lower

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.

| Tuesday 19 November, 2024

Daily Currency Update

The New Zealand dollar mounted a rebound through trade on Monday, bucking the recent trend of marking lower lows amid a broadly softer US dollar. With little of note on the macroeconomic calendar and minimal headline news flow, markets took the opportunity to square positions and take some profit on the USD. Having touched a fresh 2024 low at US$0.5836, the NZD recovered to trade back above US$0.5885, leading into this morning's open.

The question now is, is this the beginning of an NZD consolidation? We still see significant headwinds in play for the NZD. The Trump effect is likely to weigh on the currency, as the spillover effects of tariffs weigh on China and global demand, subsequently dampening demand for the embattled Kiwi. That said, the US dollar is starting from a higher base than it did in 2016 and a Trump victory was largely priced in. Risks stem from the uncertainty associated with Trump's second stint in the White House. Should Trump adopt a more aggressive US policy stance, the NZD could slide toward and through US$0.55, while a moderated US stance could help fuel a rebound back toward US$0.59/60.

We expect to make ongoing revisions to forecasts as policy details emerge through early 2025.

Key Movers

The US dollar fell on Monday as US equities rallied and treasury yields traded sideways amid a lack of headline news flow. Having enjoyed early gains, the dollar performed an abrupt about-face during overnight trade, giving up gains and tracking lower against all majors outside the Japanese yen. With the euro and GBP finding support, the dollar index opens this morning three-tenths of a per cent below Friday’s close.

The Japanese yen was the day's notable underperformer, failing to capitalise on US dollar softness, tracking lower after Bank of Japan Governor Ueda refused to be drawn on whether policymakers will lift rates next month. With the yen under pressure, markets were looking to Ueda to support the currency and his failure to do so has forced a correction in market expectations for the BoJ’s December meeting. It seems clear policymakers are bent on assessing risks and additional data received.

Our attentions turn now to European wage data, US housing starts and Canadian CPI data while stories about President-elect Trump and his cabinet appointments continue to drive direction.

Expected Ranges

  • NZD/USD: 0.5830 - 0.5920 ▲
  • NZD/EUR: 0.5500 - 0.5600 ▲
  • GBP/NZD: 2.1400 - 2.1700 ▼
  • NZD/AUD: 0.9000 - 0.9100 ▼
  • NZD/CAD: 0.8220 - 0.8320 ▼

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.