NZD outperforms as markets prepare for RBNZ policy update
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Daily Currency Update
In stark contrast to last week’s wild opening day, the New Zealand dollar tracked within a narrow range to start this week, yet still managed to outperform most other majors. With little headline data or news flow to give markets new direction we suspect investors have been adjusting expectations ahead of tomorrow’s all-important RBNZ policy meeting and Monetary Policy Statement.Trimming short positions seems the likely cause to the NZD uptick as a repositioning in the overnight OIS market see markets preparing for the RBNZ to leave rates on hold at this point. With the NZD sitting comfortably above US$0.60, our attentions turn to US PPI data tonight ahead of key inflation data tomorrow. With two key risk items on the agenda through the coming 24 hours there is ample scope for more NZD volatility.
Key Movers
With little headline data or news flow to give markets new direction, price action was well contained through trade on Monday, with most majors tracking within a 0.2% range. The DXY index was little changed while the euro and GBP were mostly flat. The yen was the day's big mover, underperforming and allowing the USD to move back above 147, marking session highs briefly above 148 before settling nearer 147.2. Price action has settled since touching 141.7 last Monday, yet the dollar is significantly lower than it was in July, well off levels above 160.Our attentions turn now to US PPI data tonight ahead of Wednesday’s all important CPI print. With markets pricing in 100 basis points of cuts over the next three Fed meetings, sustained easing of price pressure could add downward pressure on the USD and help revive risk appetite.
Expected Ranges
- NZD/USD: 0.5980 - 0.6050 ▲
- NZD/EUR: 0.5420 - 0.5520 ▲
- GBP/NZD: 2.1100 - 2.1300 ▼
- NZD/AUD: 0.9080 - 0.9220 ▲
- NZD/CAD: 0.8220 - 0.8320 ▲