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NZD under pressure as global rates rise and risk aversion takes hold

Wednesday 19 January, 2022

Daily Currency Update

The New Zealand dollar tracked lower through trade on Tuesday, giving up 0.68 US cents amid a broader US dollar uptick. Having tracked sideways through the domestic session, the NZD shifted off intraday highs at 0.6810, giving up half a cent and marking intraday lows marginally above 0.6750. An uptick in global rates and renewed risk aversion prompted investors to give up recent NZD gains and pursue haven assets. With little of note on today’s ticket, the ebb and flow of risk demand will continue to drive NZD direction. We expect the currency will continue to find support on moves approaching 0.6730/0.67 while succumbing to selling pressure on moves above 0.68/0.6850.

Key Movers

The US dollar advanced through trade on Tuesday amid a backdrop of higher global rates and a sustained risk off run. The DXY dollar index advanced 0.5% on the day, pushing back toward 96 as the USD advanced against the majority of major counterparts. The correlation between higher Fed interest rate expectations and a broader risk off narrative appears to be returning, adding support to the USD and driving the EUR and GBP lower overnight. Having touched highs above 1.14 the EUR feel sharply giving up three quarters of a percent and marking intraday lows at 1.1320, while the GBP slipped back below 1.36. The JPY was the day's big winner, staving off further deprecation against the USD and a push toward 115 as the up tick in risk aversion helped push investors toward haven assets. Our attentions today turn to UK and Canadian CPI data.

Expected Ranges

  • NZD/USD: 0.6700 - 0.6830 ▼
  • NZD/EUR: 0.5930 - 0.6020 ▲
  • GBP/NZD: 1.9980 - 2.0150 ▲
  • NZD/AUD: 0.9380 - 0.9450 ▼
  • NZD/CAD: 0.8430 - 0.8530 ▼