Kiwi buoyed by hawkish RBNZ and weaker US data
Thursday 24 November, 2022
Daily Currency UpdateThe New Zealand dollar extended back beyond $US0.62 through trade on Wednesday amid broader USD weakness and a hawkish RBNZ surprise. While the market was well positioned for an aggressive RBNZ update policy makers still managed to surprise analyst lifting rates by 75 basis points to 4.25%, while at the same time suggesting they had toyed with the prospect of a supersized 100 point adjustment. The prospect of a possible 100-point hike saw the peak OCR lifted to 5.5% with Governor Orr suggesting he and the board were very keen to reach the peak OCR and control inflation pressures. The suggestions of added and aggressive rate hikes at a time when other major central banks are considering tempering the pace of rate adjustments helped fuel a surge in NZ rates and in combination with weaker than anticipated US data drove the NZD through US$0.62 to mark intraday highs at US$.6250. With little of note on todays local ticket our attentions turn to the release of the Fed’s FOMC meeting minutes. Any insight into policy makers penchant to temper the pace of rate hikes will be closely monitored and key to driving near term direction.
Key MoversThe US dollar suffered another round of selling pressure as markets maintain a bad news is good news mantra. Softer than anticipated US PMI data and a rise in weekly jobless claims outweighed stronger than anticipated consumer sentiment and durable goods orders driving US rates lower and the US dollar downward against a host of counterparts. The Great British pound was the strongest of the major, pushing through 1.20 while the Yen continues to gather momentum against a weaker rates backdrop and the euro looks to consolidate its break above parity. Significantly the Canadian dollar failed to capitalise on broad based US dollar weakness and instead gave up 0.2% amid a sharp decline in Oil prices. Oil prices plunged 4% overnight as the US reported larger than expected Gasoline stockpiles while the EU imposed a higher than anticipated price cap on Russian oil to ensure supplies continue to flow into the global market.
In other new the Chinese yuan weakened following protests in Zhenghou. Workers at Apples iPhone plant rallied against local authorities protesting Covid restrictions and inconsistencies. Social unrest is rising in China amid the growing pressures of ongoing lockdowns and restrictions and while the government is promising economic support the effectiveness of strict lockdown protocols is beginning to waver.
With little of note on the macroeconomic ticket today we look to the latest Fed meetings minutes. While Fed officials have offered plenty of content in the 2 weeks since the last policy announcement the minutes will provide further insight into policy makers proclivity to temper the pace of rate hikes.
- NZD/USD: 0.6080 - 0.6290 ▲
- NZD/EUR: 0.5950 - 0.6050 ▲
- GBP/NZD: 1.9220 - 1.9420 ▲
- NZD/AUD: 0.9240 - 0.9340 ▲
- NZD/CAD: 0.8200 - .8380 ▲