NZD continues to outperform as USD stumbles
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Daily Currency Update
The New Zealand dollar continued to build on its recovery, pushing above US$0.59 and holding onto gains through trade on Wednesday amid a broadly weaker US dollar. US equities fell as tariff headlines forced investors to continue divesting of US assets. Nvidia led the losses across the IT sector after the White House imposed a restriction on the export of their H20 chip to China, prompting an 8% collapse in its share price, driving losses across the S&P 500 and Nasdaq. US treasury yields fell and the dollar followed suit, allowing the NZD to mark intraday highs just shy of US$0.5937. With most majors advancing against the USD, NZD crosses are little changed. There has been minimal net movement in NZDAUD while a stronger euro has forced the NZD back below 0.52 and a weaker GBP fostered a break above 0.4475.Our attentions turn now to RBNZ and CPI inflation estimates, the European Central Bank (ECB) policy meeting, and Australian employment data as the headline items on the macro docket. Tariff headlines continue to drive sentiment and direction into the Easter long weekend.
Note: Our daily commentary will return after the Easter break on Tuesday 22 April.
Key Movers
The US dollar was on the back foot again amid further escalation in the tit-for-tat trade war with China. US equities stumbled, led by losses across tech stocks. Nvidia plunged 8% and announced a 5.5billion dollar Q1 write down after the White House blocked exports of its H20 chip to China. The S&P 500 fell a further 2.2% on the day as investors exit US assets in search of alternate safe haven corridors. The USD DXY index is down near 1% as the euro led gains among major currencies, back up near 1.14, having marked intraday highs at 1.1399. In contrast, the pound enjoyed limited upside after CPI inflation data printed softer than expected, cementing calls for a further 4 25 point rate cuts through year-end.As we look now to the Easter long weekend, tariff headlines continue to dominate direction. The sustained escalation in trade tensions continues to elevate fears for US recession. Even a softening in Trump's tariff program will do little to avoid a dramatic slowdown in US economic activity, while a sustained hard lined approach could trigger a 1930s style depression. We expect volatility will remain elevated and at untenable levels until a clearer trade picture emerges. In macro news, the ECB is expected to cut rates when it meets this evening.
Expected Ranges
- NZD/USD: 0.5800 - 0.6000 ▲
- NZD/EUR: 0.5120 - 0.5220 ▼
- GBP/NZD: 2.2200 - 2.2500 ▼
- NZD/AUD: 0.9220 - 0.9320 ▲
- NZD/CAD: 0.8200 - 0.8300 ▼