Home Daily Commentaries NZD forced lower as risk off mood envelops markets

NZD forced lower as risk off mood envelops markets

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 4 September, 2024

Daily Currency Update

The New Zealand dollar was among the day's underperformers as softness through the Australasian session eked into overnight trade. Having fought its way back above US$0.62 and toward session highs just short of US$0.6235 the NZD slipped through the latter part of the domestic session as elevated risk aversion weighed on risk assets. Expectations for further tightening of monetary policy controls by the Bank of Japan again brought into focus the risks associated with the unwinding of yen carry trades, while US investors returned from the labour day long weekend with a defensive risk-off mood. The NZD slipped back below US$0.62 and traded this morning marginally above US$0.6180. While lower against the USD the NZD has bounced back above US$0.92 against the AUD but is weaker against the euro, GBP and yen.

Our attention now turns to Bank of Canada where we expect them to cut rates while US jobless claims will prove key in shaping expectations ahead of Friday’s all-important non-farm payroll print.

Key Movers

A definitive risk-off tone enveloped markets on Tuesday, benefiting the defensive currencies and bolstering demand for the USD, CHF and yen. The yen however was the day's best performer advancing 1% against the USD after Bank of Japan Governor Ueda submitted plans to a government panel outlining the need for further rate hikes should the economy and prices continue to perform in line with the bank's projections. The report served as a timely reminder of the risks connected to a further carry trade unwinding and prompted an uptick in risk aversion through the Asian session that eked into overnight trade. With risk off and global equities lower the euro and GBP gave up a quarter percent while commodity currencies were the day's big underperformers.

Our attention now turns to the Bank of Canada policy meeting where we expect they another 25-point rate cut while China Caixin services data and US jobs data dominate the offshore ticket.

Expected Ranges

  • NZD/USD: 0.6120 - 0.6250 ▼
  • NZD/EUR: 0.5550 - 0.5650 ▼
  • GBP/NZD: 2.1000 - 2.1400 ▼
  • NZD/AUD: 0.9170 - 0.9250 ▲
  • NZD/CAD: 0.8320 - 0.8450 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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