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NZD: NZD/USD Falls As Geopolitical Tensions Rise

NZD
USNew ZealandNorth AmericaBulletAPACForeign Exchange BulletsMarkets
  • NZDU/USD fell 0.64% to 0.5874 on Wednesday it has been a quiet couple of days for data, yields rose as geopolitical tensions between Russia and Ukraine continued to rise, which has helped USD traded firmer with the BBDXY trading 0.44% higher.
  • NZ treasury stated that the economic downturn has been deeper and recovery slower than anticipated in the Treasury's 2024 Budget forecast. Key indicators include Q2 GDP contraction, weak card spending, and ongoing contraction in manufacturing and services, alongside company pessimism. Despite minimal declines in hours worked, weak productivity growth poses further downside risks to economic growth and tax revenue forecasts, with sales tax collections underperforming relative to economic activity.
  • Taking a look at technical levels,  support holds at 0.5836 (Nov 18th lows), with a break here opening a move to the 2023 lows of 0.5772 (Oct 26th 2023). Initial resistance is 0.5920 (Nov 20 highs) a move back above here would see a test of 0.5949 (20-day EMA).
  • RBNZ dated OIS pricing firmed on Monday with 55bps of cuts priced in for November. Looking out to 2025 the market has is little changed with 93bps of cuts priced for Feb and 113bps by April, while further out the curve the market expects 132bps of cuts by Oct 2025.
  • The US-NZ 2yr swap fell 0.5bp on Wednesday to -43.5bps, and made new multi-year lows of 44bps yesterday.
  • There is a large expiry for Nov 25, strike of 0.6000 ($978m).
  • The local calendar is empty today.
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  • NZDU/USD fell 0.64% to 0.5874 on Wednesday it has been a quiet couple of days for data, yields rose as geopolitical tensions between Russia and Ukraine continued to rise, which has helped USD traded firmer with the BBDXY trading 0.44% higher.
  • NZ treasury stated that the economic downturn has been deeper and recovery slower than anticipated in the Treasury's 2024 Budget forecast. Key indicators include Q2 GDP contraction, weak card spending, and ongoing contraction in manufacturing and services, alongside company pessimism. Despite minimal declines in hours worked, weak productivity growth poses further downside risks to economic growth and tax revenue forecasts, with sales tax collections underperforming relative to economic activity.
  • Taking a look at technical levels,  support holds at 0.5836 (Nov 18th lows), with a break here opening a move to the 2023 lows of 0.5772 (Oct 26th 2023). Initial resistance is 0.5920 (Nov 20 highs) a move back above here would see a test of 0.5949 (20-day EMA).
  • RBNZ dated OIS pricing firmed on Monday with 55bps of cuts priced in for November. Looking out to 2025 the market has is little changed with 93bps of cuts priced for Feb and 113bps by April, while further out the curve the market expects 132bps of cuts by Oct 2025.
  • The US-NZ 2yr swap fell 0.5bp on Wednesday to -43.5bps, and made new multi-year lows of 44bps yesterday.
  • There is a large expiry for Nov 25, strike of 0.6000 ($978m).
  • The local calendar is empty today.