NZD under pressure as near-term focus on additional Fed rate hikes

Daily Currency Update

The New Zealand dollar tracked sideways through trade on Monday in what was a relatively quiet start to the week when compared with the tumult caused by another US data surprise on Friday. With little of note on the domestic macroeconomic ticket, the NZD tracked toward intraday lows just north of US$0.6130 as a broader risk-off tone enveloped trade action.

Having fallen through the back end of the domestic session, the NZD found some overnight support after weaker-than-anticipated US durable goods data and reports the UK and EU have agreed to a new trade deal, which softens protocols surrounding the only shared border in Ireland, helped alleviate risk aversion.

Attention today turns to the ANZ business outlook. The survey should capture the impacts of the floods in Auckland in late January, but will not yet reflect the damage caused by cyclone Gabrielle. With domestic supply chains already stretched and confidence dented back-to-back natural disasters will have done little to improve sentiment.

The NZD will likely continue to face near-term downward pressures as market attentions remain affixed to near-term Fed policy.