NZD find support as risk sentiment improves
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Daily Currency Update
The New Zealand dollar outperformed through trade on Tuesday, pushing back above US$0.5950 amid a renewed appetite for risk. Sentiment improved and risk demand returned to financial markets allowing the NZD to bounce of lows below US$0.5915 and touch intraday day highs just south of US$0.5970. There is no obvious catalyst for the rebound in risk outside markets shifting tact and recognizing moves since US non-farm payrolls on Friday have been overdone. With risk aversion fading the NZD enjoyed gains against most majors, recovering to trade back above €0.5450 against the euro and close to £0.47 against the GBP. Ranges against the yen remain volatile but with risk on and the JPY underperforming the NZD has rallied back above ¥85 and ¥86 to open this morning at ¥86.14.Our attention now turns to domestic employment data. We expect to see further deterioration in labour market conditions and another uptick in the unemployment rate. With unemployment closing in on three-year highs pressure is growing for the RBNZ to respond. Another poor print could all but guarantee a rate cut next month.
Key Movers
Risk sentiment returned to markets yesterday allowing commodity currencies to rebound off lows while forcing a correction across haven assets. The yen underperformed giving up 0.4% and allowing the USD to claw back toward ¥144.80 while the DXY index climbed as the euro and GBP both gave up ground. The pound relinquished more than half a percent, sliding back below US$1.27 while the euro slipped toward US$1.09 before finding support.Our attention now turns to a pretty quiet macro docket with NZ labour market numbers and China trade data dominating the ticket. We expect direction to again be driven by broad global forces and fluctuation in risk sentiment.
Expected Ranges
- NZD/USD: 0.5900 - 0.6000 ▲
- NZD/EUR: 0.5400 - 0.5500 ▲
- GBP/NZD: 2.1200 - 2.1600 ▼
- NZD/AUD: 0.9050 - 0.9150 ▼
- NZD/CAD: 0.8180 - 0.8280 ▼