Home Daily Commentaries NZD eyes a break below US$0.58 as RBNZ policy update looms

NZD eyes a break below US$0.58 as RBNZ policy update looms

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 27 November, 2024

Daily Currency Update

The New Zealand dollar underperformed through trade on Tuesday, propelled back toward its post-election low after a Social Media post from President-Elect Donald Trump sent markets into a tizzy. The goodwill garnered after the appointment of Scott Bessent to treasury Secretary evaporated after Trump posted to Truth Social announcing he would impose steep new tariffs on Mexico, Canada and China as soon as he begins his new term in the White House. The promise of an additional 10% tariff on Chinese goods propelled the USD up through 7.25 against the Chinese yuan, driving the NZD toward intraday lows only marginally above US$0.0.58. While details surrounding the proposed tariffs remain scant, the ongoing risk of such headlines ensures the NZD will face ongoing headwinds through the near term as investors remain on edge and market volatility is elevated. While the NZD mounted a small recovery overnight, trading back above US$0.5850 it could not sustain gains and opened this morning buying US$0.5822.

Our attention now turns to the RBNZ and its policy statement. We expect a 50 basis point rate from 4.75% to 4.25%, while updated forecasts and rate projections will be key in shaping near-term expectations.

Key Movers

The US dollar was broadly stronger Tuesday as the market direction was dominated by a truth social post from President-Elect Donald Trump promising that steep new tariffs would be imposed early in his 2nd term. The DXY dollar index lurched higher up 0.3% as commodity-linked currencies tumbled. With Trump promising to issue a 255 Tariff on Canada and Mexico both the CAD and MXN tumbled following the announcement and offered little sign of a recovery in the hours that followed. With risk sentiment evaporating the JPY is the only G10 currency to have outperformed the US dollar.

Our attention now turns to the RBNZ’s policy meeting, Australian inflation data, European consumer confidence data, and US GDP estimates, while political headlines continue to drive the underlying narrative.

Expected Ranges

  • NZD/USD: 0.5750 - 0.5880 ▼
  • NZD/EUR: 0.5500 - 0.5600 ▼
  • GBP/NZD: 2.1300 - 2.1700 ▲
  • NZD/AUD: 0.8950 - 0.9050 ▲
  • NZD/CAD: 0.8120 - 0.8280 ▲

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.