NZD hits two month low amid rising concerns for impact of a Trump 2.0 Presidency
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Daily Currency Update
The New Zealand dollar was one of the worst-performing major currencies through trade on Tuesday amid stronger-than-expected US data and rising concern for a second Trump Presidency. With little of note on the domestic ticket the NZD tracked sideways before giving up 0.4% through overnight trade, sliding below US$0.6050 to mark a fresh two-month low at US$0.6037. US June retail sales printed significantly ahead of market estimates bolstering bets for a strong Q2 GDP print and offering little to change Fed pricing expectations. Momentum had been gathering around a possible 3rd rate cut before year-end, but a resilient consumer base suggests the Fed can afford to be patient and measured in adjusting policy. The NZD gapped lower on the back of the data print and failed to recover losses despite a USD correction late in the day. With Trump already talking harder and firmer tariffs for China there are fears the NZD will become a scapegoat in the lead-up to the November 5 election. With the US election acting as a headwind and momentum gathering around at RBNZ rate cut the NZD faces a significant near-term headwind and should markets consolidate a move below US$.6050 a break toward US$.60 is not impossible.Our attention now turns to domestic quarterly CPI data. A softer print will help validate calls for an RBNZ rate cut and heap more downward pressure on the NZD while an upside surprise could lend the NZD some near-term support.
Key Movers
The US dollar enjoyed mixed fortunes through trade on Tuesday and ended flat for the day as conflicting forces pulled the world’s base currency in different directions. The USD rallied following a hotter-than-anticipated domestic Retail sales print. US June retail sales data showed personal consumption jumped 0.9% well ahead of the 0.2% increase priced in by analysts. Even when stripped to exclude car sales purchasing activity was still well above consensus estimates and suggests that Q2 GDP could print higher than expected on the back of consumption growth. While there was little movement in Fed pricing the stronger print gives the Fed license to adopt a slow and measured path when easing interest rates. The USD jumped in the moment following the print but a retracement in yields forced the dollar to give up gains and finish largely unchanged on the day. The DXY dollar index is up 0.05%.In other news, Canadian CPI data fell in line with expectations elevating expectations the Bank of Canada will cut rates again next week.
Our attention now turns to UK, NZ, and Eurozone CPI prints as key marked guiding directions throughout the day.
Expected Ranges
- NZD/USD: 0.6000 - 0.6120 ▼
- NZD/EUR: 0.5500 - 0.5600 ▼
- GBP/NZD: 2.1300 - 2.1600 ▲
- NZD/AUD: 0.8950 - 0.9050 ▲
- NZD/CAD: 0.8220 - 0.8320 ▼