Kiwi follows the Aussie lower, shedding 0.4%
Daily Currency Update
The New Zealand Dollar shed more than 0.4% to open this morning at 0.6536 after the Australian unemployment rate surprised the market. The rise in the unemployment rate from a revised 5.1% in March to 5.2% in April put downward pressure on the Aussie with the market raising the probability of a June rate cut to 75% in Australia. The effects of this was felt in New Zealand as well with the Kiwi matching the moves of the Aussie in the absence of any domestic data.Adding fuel to the fire was President Trumps escalation of the trade war that saw the United States ban China’s Huawei. While Commerce Secretary Wilbur Ross went to lengths to suggest that this was not a retaliation in the trade war, it clearly is an antagonistic move in an already tenuous relationship. The New Zealand economy now faces more headwinds then it has in some time.
With little on the horizon to close out the week, the Kiwi again looks across the Tasman for direction with Australian Parliamentary Elections scheduled for Saturday.
Key Movers
isk sentiment continued to improve during the Thursday session despite a further escalation in the US-China trade war which saw the Greenback move upwards against a number of their counterparts. The worlds largest economy was helped along by some better than expected earnings results from a number of companies including Cisco and Walmart. Adding to the positive sentiment was a string of strong regional Fed manufacturing surveys which bodes well for the ISM survey scheduled for release early next month. The S&P 500 rebounded over 1% and has now mostly recovered from Monday’s sharp fall and 10-year bonds trading 3bps higher on the day at 2.4%.Unfortunately, other key movers weren’t quite so positive with the Aussie and Kiwi both shedding around 0.4% to take the dubious title of worst performing major. Second worst performing currency however went to the embattled Great British Pound after Prime Minister Theresa May announced a timetable to step down. According to reports, she will put forward her withdrawal agreement for a fourth time in June in which case, if she loses she will step down immediately. If it passes, which will undoubtedly need Opposition support, she will remain in office to see the bill into law before the end of July. With Brexiteer Boris Johnson confirming his intention to put his name forward for the leadership contest, the Sterling slipped 0.3% to 1.2794, it’s lowest level since February.
Expected Ranges
- NZD/AUD: 0.9441 - 0.9513 ▲
- NZD/CAD: 0.8725 - 0.8829 ▼
- NZD/EUR: 0.5792 - 0.5883 ▼
- NZD/GBP: 0.5062 - 0.5153 ▼
- NZD/USD: 0.6480 - 0.6586 ▼