NZD propelled lower amid a stronger USD and more weak China data

Daily Currency Update

The New Zealand dollar fell sharply through trade on Tuesday giving up almost 100 points, bludgeoned by a broadly stronger USD and softer-than-anticipated China data. Having opened near US$0.6220, AUD weakness following the RBA rate announcement spilled over dragging the NZD below US$.62. Losses were then compounded after another soft China Manufacturing PMI print forced the yuan lower and subsequently drove the NZD toward and through US$0.6150. With the NZD on the back foot hopes of an overnight recovery were dashed as a broadly stronger USD pushed the NZD toward intraday lows at US$0.6130.
Our attentions turn not to local labour market data. While we expect employment growth and wage inflation will remain elevated, we don’t expect they will change the RBNZ’s current policy stance and prompt a pivot away from leaving rates on hold. With the NZD likely to remain entrenched with its current trading range through the domestic session we look to US ADP employment data as a marker of US labour market performance leading into Friday’s all-important non-farm payroll print. While traditionally woefully inaccurate a strong read will still bolster hopes the US economy can foster a soft landing as price pressures ease and economic momentum builds again.