NZD falters in face of hotter USD and regional weakness
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Daily Currency Update
The New Zealand dollar fell through trade on Wednesday, giving up US$0.61 amid a broadly stronger USD and weaker regional currencies. The US dollar was broadly stronger amid an uptick in US yields and a distinct risk off tone. Having opened just above US$.6120, the NZD traded sideways through the early part of the local session before the PBOC set a weaker CNY reference rate for the 5th consecutive day. With USDCNY trading toward the upper limit of the 2% trading range, there is growing pressure for the yuan to face further devaluation a significant headwind for the NZD. With the yuan on the back foot and the Japanese yen continuing to soften risk sentiment across the region faltered and the NZD edged toward intraday lows near US$.6075 before finding support. When valued against other majors, the NZD re-tested 17-year highs against the yen at 98 while slumping below A$0.9150 against the AUD.Our attention now turns to Japanese Retail Sales, European Consumer and Industrial Sentiment data, US Jobless claims, durable goods orders and Q1 GDP data.
Key Movers
While still traversing well-contained ranges, price action across majors was much more lively through trade on Wednesday. The US dollar advanced across the board amid an uptick in US yields and general risk off-tone. The USDCNY traded up through 7.2650 to mark fresh highs at 7.2670 and with the yuan’s offshore derivative, the CNH breaking 7.30 further yuan weakness lies ahead. With US yields higher the Japanese yen continued its precipitous sell allowing the USD to punch through 160, extending to a 38-year high at 160.84 with little sign of intervention. Markets will be wary of extending gains beyond this level and the pace of upside moves may slow as 160 was previously presumed to be the point of intervention. The JPY is the weakest of the majors yet all gave up sizeable ground to the USD through Wednesday. The NZD and GBP are both down half a percent while the EUR, CAD and CHF all gave up 0.3%. The AUD is the only unit to close the day flat against the USD, buoyed by the robust local inflation print.Our attention now turns to Japanese Retail Sales, European Consumer and Industrial Sentiment data, US Jobless claims, durable goods orders and Q1 GDP data.
Expected Ranges
- NZD/USD: 0.6030 - 0.6150 ▼
- NZD/EUR: 0.5650 - 0.5750 ▼
- GBP/NZD: 2.0650 - 2.0850 ▲
- NZD/AUD: 0.9080 - 0.9220 ▼
- NZD/CAD: 0.8280 - 0.8380 ▲