NZD underperforms as profit-taking takes hold
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Daily Currency Update
The New Zealand dollar fell through trade on Monday as markets looked to square positions following Friday’s closing turmoil. The NZD was among the best performers last week, surging 3% and breaking through resistance at US$0.6220 to mark fresh highs just short of US$0.6250. Confirmation from Fed Chair, Jerome Powell, that the “time has come” to cut interest rates fuelled gains on Friday as markets scramble to price in rate cut expectations.Having touched US$0.6241 early, the NZD retreated through much of the session sliding back toward US$0.6200. With markets adopting a more measured tone through trade on Monday and little of note on the macroeconomic ticket today, we expect moves will be muted. The NZD should now track a relative narrow range between US$0.6150 and US$0.6250, leading into next week's all-important US non-farm payroll print.
US labour market conditions are pivotal in determining whether the Fed is expected to make a 25 or 50 basis point rate cut in September and will shape rate expectations leading into the end of the year.
Key Movers
Price action was somewhat lacklustre through Monday given the fireworks seen on Friday as markets adopted a more measured wait and see approach. With little of note on the macro docket, profit-taking allowed the USD to claw back some of the losses it suffered following Fed Chair Jerome Powell’s Jackson Hole address. The USD DXY index edge up a fifth of one per cent, buoyed by a weaker, JPY, GBP, euro and AUD. The standout for the day being the Canadian dollar which extended last week's rally, advancing a further 0.16% on higher oil prices.With only second tier data on hand today we expect another day of consolidation ahead of US consumer confidence numbers tonight and Friday’s all important PCE price index print.
Expected Ranges
- NZD/USD: 0.6150 - 0.6250 ▼
- NZD/EUR: 0.5500 - 0.5600 ▼
- GBP/NZD: 2.1100 - 2.1400 ▲
- NZD/AUD: 0.9100 - 0.9200 ▼
- NZD/CAD: 0.8320 - 0.8420 ▼