Financial Markets Wrap

Kiwi flies through May

Jason Wong -

• After a poor run through the first four months of the year, NZD/USD bounced back strongly in May, up 4½%.
• A broadly weak USD, higher risk appetite, higher commodity prices and a more hawkish than expected RBNZ were factors.
• The NZD’s outperformance saw it higher on all the key crosses, including reaching a 17-year high against the beleaguered yen.

NZD remained soft in April

Jason Wong -

• Positive inflation surprises in the US drove higher rates, spilling into other markets, and a broadly stronger USD
• The NZD hit fresh lows against the USD and AUD, but with modest net depreciation overall
• JPY was the weakest major by far, following higher global rates and the BoJ remaining dovish; NZD/JPY rose almost 3%

NZD underperforms in March

Jason Wong -

• Despite higher risk appetite and global commodity prices, the NZD underperformed in March, down 1-2% against most majors
• Softer yuan and yen were drags on the NZD; Soft Q4 GDP highlighted poor NZ economic performance last year
• Global equities reach record highs; modest fall in global rates as developed market easing cycle kicked off by the Swiss