Home Daily Commentaries NZD outperforms amid stronger US inflation input data

NZD outperforms amid stronger US inflation input data

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 15 May, 2024

Daily Currency Update

The New Zealand dollar was one of the better performing major currencies Tuesday up 0.4% amid broader USD softness. After tracking sideways through the domestic session the NZD showed remarkable resilience in the face of a stronger than expected US PPI print and USD surge allowing it to push off US$0.6020 to mark session highs above US$0.6040 as markets worked to retrace USD gains. Comments from Fed chair Powell dashed calls for another rate hike and drove US treasuries lower.

Our attention now turns to US CPI data, a critical marker in governing near-term direction and fed policy expectations.

Key Movers

The US dollar enjoyed mixed fortunes through trade on Tuesday closing lower on the day against most majors. Having tracked sideways early the dollar jumped higher following stronger than anticipated US PPI data for April. Core PPI showed a 0.5% increase, well ahead of market estimates for a 0.2% advance. With key PPI components feeding into the core PCE deflator, the stronger print has elevated fears of an upside risk for inflation and tonight’s CPI print. The dollar rallied following the data release before retracing gains after Fed Chair Jerome Powell affirmed his view that “interest rates are high enough” and “we need to be patient and let restrictive policy do its work”. Powell’s comments doused expectations the Fed may raise rates again and force markets to unwind USD gains. The USD is lower this morning against the euro and GBP. UK Labour market data saw wages rise 6% on a quarterly year-on-year comparison, printing above market expectations yet countered by softening jobs growth and an uptick in the unemployment rate. Market pricing for a Bank of England rate cut was largely unchanged. The yen is weaker again this morning as markets continue to test the resolve of the Bank of Japan and Ministry of Finance.

Our attention now turns to tonight’s all-important US CPI print.

Expected Ranges

  • NZD/USD: 0.5980 - 0.6080 ▲
  • NZD/EUR: 0.5520 - 0.5620 ▲
  • GBP/NZD: 2.0700 - 2.1000 ▼
  • NZD/AUD: 0.9080 - 0.9180 ▲
  • NZD/CAD: 0.8200 - 0.8300 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.