New Zealand dollar stubbornly resilient in face of stronger US dollar
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Daily Currency Update
The New Zealand dollar enjoyed mixed fortunes through trade on Thursday, giving up ground to the USD, while edging higher against the euro, GBP and Japanese yen. There was plenty to digest as market attentions turned to domestic GDP data, key central bank updates and a string of US macro data sets. Domestic GDP numbers showed a small uptick in activity, helping drive NZ rates higher. The move in rates did not however flow into currency markets and the NZD tracked between US$0.6130 and US$0.6140 for much of the local session, before sliding toward intraday lows just above US$0.6110 overnight. The US dollar enjoyed broad based support, advancing across the board, while a softer Chinese yuan spilled over and weighed on the NZD. Having touched US$0.6113, the NZD found support and opens this morning nearer US$0.6120. In other news, the NZD hit a fresh 17 year high against the yen, breaching 97.30, while pushing toward 0.4850 against the GBP and consolidating a break above 0.57 against the euro.Our attentions turn now to Japan CPI data and a host of PMI data releases across the US and Europe.
Key Movers
There has been plenty to digest and absorb through the last 24 hours with two key central bank policy updates and a string of macro data sets guiding direction. As expected, the Bank of England elected to leave rates on hold, yet surprised markets in suggesting a rate cut may be issued as early as August. The Monetary Policy Committee voted 7:2 to hold rates, with the minutes revealed that for some of the seven voters that opted to leave rates on hold the decision was “finely balance”. With inflationary pressures continuing to moderate, the chance of an August rate cut jumped to over 60%, well up from the just 30% probability leading into the meeting. The pound retreated on the back of the dovish hold, down near half a percent.In other news, the Swiss National Bank elected to cut rates for the 2nd consecutive time, driving CHF losses, while Norway’s central bank left rates unchanged, helping fuel NOK gains as policy makers indicated rates would remain elevated until the end of the year.
Soft US domestic data forced US treasury yields lower, but the move was not sustained with 2- and 10-year rates closing higher for the day. The extension in US rates weighed on the yen and the dollar pushed back through 159, elevating calls for another round of intervention. With JPY softness amplified by the Bank of Japan’s reluctance to adjust and commit to monetary policy change, the need to defend the embattled currency rises.
Our attentions turn now to Japan CPI data and a host of PMI data releases across the US and Europe.
Expected Ranges
- NZD/USD: 0.6080 - 0.6220 ▼
- NZD/EUR: 0.5680 - 0.5780 ▲
- GBP/NZD: 2.0600 - 2.0800 ▼
- NZD/AUD: 0.9150 - 0.9250 ▼
- NZD/CAD: 0.8320 - 0.8420 ▼