Home Daily Commentaries NZD tests key tipping point as risk aversion envelopes market

NZD tests key tipping point as risk aversion envelopes market

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.

| Friday 19 July, 2024

Daily Currency Update

The NZD underperformed through trade on Thursday overwhelmed by a wide sweeping risk off mood and a stronger US dollar. Having maintained a narrow range through much of the local session and early hours of offshore trade, the NZD then pitched lower, sliding off US$0.6080 and below US$0.6050 to mark session lows just below US$0.6045. There is no obvious catalyst for the spike in risk aversion and with no domestic date to prop up the currency, the NZD has spent much of the last few hours on the back foot. The NZD has marked a series of lower lows through the start of July and remains entrenched within a downtrend. If it cannot repel this latest break below US$0.6050 then the door opens for a further retracement toward and through US$0.60.

Our attentions turn now to commentary from key Fed officials and broader market risk tolerance for direction into the weekly close.

Key Movers

A risk off mood enveloped markets through trade on Thursday allowing the USD to retrace Wednesday’s downturn, as treasury yields edged higher and equities fell. The DXY dollar index jumped 0.4% on the day advancing against all major counterparts. With US treasury yields higher, the Japanese yen gave up three quarters of one percent, while the euro eased back below 1.09 and the GBP gave up 1.30. Markets seemed content in ignoring the ECB policy meeting after officials confirmed the Bank was leaving rates unchanged. The decision to not adjust rates for a 2nd consecutive month was widely expected and with messaging surrounding future hikes unchanged, ECB pricing expectations were little moved. With no obvious catalyst for the latest risk off move, our attentions turn now to Japanese Core CPI data, UK retails sales, German PPI numbers and Canadian retail sales, while commentary from Fed members Williams and Bostic will provide some colour into the weekly close.

Expected Ranges

  • NZD/USD: 0.6000 - 0.6100 ▼
  • NZD/EUR: 0.5500 - 0.5600 ▼
  • GBP/NZD: 2.1200 - 2.1500 ▲
  • NZD/AUD: 0.8980 - 0.9050 ▼
  • NZD/CAD: 0.8250 - 0.8350 ▼

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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