New Zealand dollar struggles continue
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Daily Currency Update
The New Zealand dollar struggles continued through trade on Monday as a backdrop of lower commodity prices and a broadly stronger USD forced a fresh three-month low. The New Zealand dollar was hammered last week, as underwhelming China stimulus plans, softer commodity prices, US election uncertainty and a rapid unwinding of Japanese yen carry trades coalesced to foster a veritable perfect storm in which markets dumped the NZD. The Kiwi extended a break below US$0.59, marking new lows at US$0.5858, before finding support and creeping back toward US$0.5875.Our attention turns now to a packed macroeconomic calendar. Australian Q2 CPI inflation data Wednesday, Bank of Japan, Federal Reserve and Bank of England policy meetings, European inflation data and US non-farm payrolls headline a crowded ticket and offer plenty of ammunition to drive another wild week of price action. We expect the NZD will trace out wider ranges this week.
Key Movers
When compared with the wild price action last week markets appeared content in treading water through trade on Monday, with most majors tracking within a narrow range. The AUD and NZD remained on the back foot amid lower commodity prices, while the euro underperformed on the day and the USD pushed back against last week's yen surge.The euro and Swiss franc were the day's underperformers amid reports EU officials were developing new trade strategies to deal with punitive tariffs that may be imposed should Donald Trump win re-election. With the potential for duties of 50% to be levied on imports, talk of a renewed trade war dampened demand for the single currency. With the GBP and JPY tracking a narrow range, our attention turns to Wednesday and the Bank of Japan policy meeting.
The BoJ is expected to offer a detailed plan for ending quantitative easing in what will be a major step to normalising monetary policy. With some analysts calling for officials to double down and raise interest rates, or at the very least hint toward a rate hike in the near term, yen pricing will likely track amid a wider range leading out of the meeting.
With the Bank of England and Fed meeting as well this week there is ample scope for elevated volatility through US non-farm payrolls and the weekly close on Friday.
Expected Ranges
- NZD/USD: 0.5820 - 0.5920 ▼
- NZD/EUR: 0.5400 - 0.5500 ▲
- GBP/NZD: 2.1700 - 2.2000 ▲
- NZD/AUD: 0.8900 - 0.9000 ▼
- NZD/CAD: 0.8080 - 0.8180 ▼