NZD testing new lows as investors in turmoil as US tariff agenda continues to reverberate across financial markets
Written by
Daily Currency Update
Volatility and turmoil continued to envelope markets through trade on Monday, extending last week’s sharp correction, as markets remain hostage to tariff headlines. Equities and risk assets remain under pressure amid risk-off trading conditions, forcing the NZD toward fresh 5-year lows. Having fallen through US$0.5550 during the domestic session, the NZD then found support pitching back above US$0.56 after reports emerged suggesting President Trump was considering a 90-day pause on tariffs for all countries except China.Having touched session highs at US$0.5615, the NZD quickly unwound gains after the White House quickly released a statement denigrating the report, labelling it “fake news”. President Trump appears intent on staying the course, suggesting the massive declines seen across stocks and elevated recession fears were the tonic needed to fix the US’s broken trading backdrop. As markets weigh the costs of this new reality, we can expect volatility and uncertainty to remain elevated.
The NZD will face ongoing pressures as long as negative headlines drive risk aversion. We are watching key supports at US$0.55. An extended break below this threshold could spell the beginnings of another run lower.
Key Movers
Price action remained elevated on Monday and markets looked to haven currencies amid the uncertainty and turmoil that is the US tariff agenda. The USD DXY index surged, up 0.5%, as risk-correlated and commodity-linked currencies continued their move lower. The dollar enjoyed support on haven plays, while the yen, Swiss franc and euro all edged upward as markets sought to divest of risk.The euro has found support in haven plays, bolstered by Europe’s 1 trillion euro fiscal pivot in March. Having tested a break below 1.09 on open yesterday, the currency pushed back toward intraday highs north of 1.1025, before settling near 1.0930. Markets remain at the mercy of tariff headlines, with President Trump steadfastly committed to the US tariff agenda.
Tensions with China escalated further on Monday, with President Trump responding to China’s retaliatory measures, suggesting a further 50% tariff on Chinese goods will be imposed on April 9 unless China removes its 34% retaliatory tariff.
With a near 70% tariff now imposed on Chinese exports, and with the US economy effectively shut-off, the threat of further tariffs is somewhat empty. At some point the tariff rate becomes irrelevant. That said, it does speak to the climate of the moment and with the US pushing hard on all trading partners, we can expect uncertainty and volatility will remain elevated through the near term.
Expected Ranges
- NZD/USD: 0.5400 - 0.5800 ▼
- NZD/EUR: 0.4900 - 0.5300 ▼
- GBP/NZD: 2.2500 - 2.3500 ▲
- NZD/AUD: 0.9050 - 0.9300 ▲
- NZD/CAD: 0.7700 - 0.8200 ▼