NZD stronger as USD finds a new 3 year low
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Daily Currency Update
The New Zealand dollar climbed through trade on Thursday, advancing on the heels of sustained US dollar weakness. The NZD faced a test of supports at US$0.60, following an upswing in trade tensions, after President Trump confirmed his administration would be delivering letters to all those trading partners deemed not to be dealing in good faith within the next two weeks, announcing “At a certain point you say this is the deal, you can take it or leave it”. The comments further muddied the waters of global trade, dampening risk demand. Having touched lows at US$0.6007, the NZD then found support, rallying overnight following weaker than anticipated US PPI data for May and an uptick in weekly jobless claims. The softer data forced a flattening in US treasury yields, driving the dollar lower and allowing the NZD to mark fresh weekly highs just short of US$0.6070.Our attentions now turn to local PMI data, Japan industrial production numbers, US consumer sentiment data and the G7 leaders’ summit in Alberta Canada. As trade tensions are again on the rise, the 3-day summit may prove key in shaping the near-term risk narrative.
Key Movers
The US dollar has again underperformed, losing ground to all G10 currencies following softer than anticipated macro data and ongoing tariff uncertainties. May's PPI data showed little immediate impact from tariffs, with only a marginal increase in price pressures, affording the Fed few barriers to cutting rates in response to a slowdown in activity across the economy. US weekly jobless claims also rose more than anticipated with 248,000 claimants presenting for unemployment benefits. The 4-week average has risen steadily with continuing/repeated claims touching their highest level in four years, highlighting the increasing difficulty in finding a job. Troubling macroeconomic markers and a softer bond auction pushed treasury yields lower and drove the dollar to its lowest level in more than three years. The Scandinavian currencies and Swiss franc led gains, with the euro and yen enjoying a 1% uptick, while the GBP and CAD were among the laggards. The pound underperformed after GDP data showed a contraction in activity.Our attentions now turn to Japan industrial production numbers, US consumer sentiment data and the G7 leaders’ summit in Alberta Canada. As trade tensions are again on the rise, the 3-day summit may prove key in shaping the near-term risk narrative.
Expected Ranges
- NZD/USD: 0.6000 - 0.6100 ▲
- NZD/EUR: 0.5180 - 0.5280 ▼
- GBP/NZD: 2.2250 - 2.2500 ▼
- NZD/AUD: 0.9250 - 0.9320 ▲
- NZD/CAD: 0.8200 - 0.8300 ▲