Kiwi bounces back through US$0.61 on softer US data
Written by
Daily Currency Update
The New Zealand dollar lurched higher Wednesday, punching back through US$0.61 following softer-than-expected US data. A much weaker than anticipated US ISM Services report and an uptick in US weekly jobless claims forced a sharp correction across US yields and a steep retracement in the USD, opening the door for the NZD to climb off lows below US$0.6070. The ISM Services index fell 5 points, slipping below 50 and entering contractionary territory while US jobless claims rose more than expected, signalling further softening in labour market conditions. With the DXY index on the back foot, the NZD Jumped to intraday highs at US$0.6126 before edging back toward US$0.61 leading into this morning’s open. The question now is, can the NZD recover back above US$0.61? An extended run could see the NZD consolidate supports at this handle, regaining a higher trading range between US$0.61 and $.62. Our attentions now turn to US non-farm payroll numbers Friday as a critical marker in governing near-term direction.Key Movers
There is plenty to digest this morning with price action among the majors showing signs of life after an extended period of narrow moves. A much softer than expected US ISM Services print coupled with an uptick in US jobless claims forced a sharp retracement in US treasury yields and the USD as markets brought forward bets for a Fed rate cut. The DXY dollar index fell 0.35% as commodity currencies led gains. The NOK, SEK and AUD all climbed over half a percent with the NOK and SEK up more than 1% while the euro and GBP both advanced. The euro tested a break above 1.08 marking session highs at 1.0812 before edging back toward 1.0775, closing 40 points higher on the day. The GBP surged through 1.27 to mark highs just short of 1.2780 before correcting back toward 1.2730, up more than 50 points on yesterday’s open. The only laggard for the day was the Japanese yen. The yen allowed the USD to mark new highs at 161.95 before pushing back, forcing the USD back to 161.70, still closing lower through the last 24 hours.Our attentions now turn to UK polling booths with the UK General Election underway. Anything short of a landslide labour win will come as a major shock and could prompt GBP volatility. In Europe, we look to the ECB June meeting minutes and German factory orders for key macro updates. US markets will be closed in observance of Independence Day.
Expected Ranges
- NZD/USD: 0.6050 - 0.6150 ▲
- NZD/EUR: 0.5600 - 0.5700 ▲
- GBP/NZD: 2.0700 - 2.1100 ▼
- NZD/AUD: 0.9050 - 0.9150 ▼
- NZD/CAD: 0.8270 - 0.8350 ▲