NZD well and truly range bound as markets sideline major bets
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Daily Currency Update
The New Zealand dollar tracked marginally lower through trade on Wednesday yet remains entrenched within a familiar trading handle. Price action across major currencies was well contained and the NZD was confided to a 10-point trading range for much of the day, bouncing between US$0.6128 and US$ 0.6138. Markets largely ignored RBNZ Chief Economist Paul Conway as his speech on the inflation outlook offered little new insight into policymakers' thinking and failed to alter expectations surrounding the timing and trajectory of RBNZ policy change. With US markets closed in observance of the Juneteenth holiday, price action was thin and our attentions turned to US jobless claims and the Bank of England policy update today, ahead of a slew of service and manufacturing data Friday as key drivers for direction into the weekly close.Key Movers
Price action across currency markets was well contained through trade on Wednesday as investors in the US observed a public holiday and markets appeared content in delaying big bets ahead of the Bank of England (BoE) policy update. UK headline inflation increased 2% year on year, in line with market expectations and the Bank of England’s target. Despite inflation finally converging with the Bank of England’s target after three years of price pain markets pared expectations for a rate cut following stubbornly sticky services inflation. Markets expect the BoE will unanimously vote to leave rates on hold today while a rate cut in August looks less likely. We expect September will be the first meeting where a rate cut is a real possibility. The GBP edged upward against most counterparts following the print, consolidating a break above 1.27. The euro is flat and stuck between 1.07 and 1.0750 while the Yen continues to try and defend moves above 158.Our focus now turns to the Bank of England policy meeting, US jobless claims, housing data and Fed commentary for direction through trade on Thursday.
Expected Ranges
- NZD/USD: 0.6080 - 0.6180 ▼
- NZD/EUR: 0.5650 - 0.5750 ▼
- GBP/NZD: 2.0680 - 2.0920 ▲
- NZD/AUD: 0.9150 - 0.9250 ▼
- NZD/CAD: 0.8380 - 0.8480 ▼