NZD tumbles through November
The NZD trended lower through November, against a backdrop of numerous positive US economic surprises that proved USD-supportive, with a more hawkish pivot from Fed policy makers thrown into the mix. NZ rates were mainly lower as the market priced in a less aggressive tightening path from the RBNZ. World equities hit fresh highs, before the discovery of a new COVID19 variant Omicron reined in risk appetite. Global rates were moderately lower despite ongoing positive inflation surprises that saw G7 inflation at a thirty-year high.
NZD rebounds in October
The return of the global relation theme in October saw commodity currencies outperform.
Higher NZ, Australian and Canadian short-term rates supported the move. NZD/USD rose nearly 4%.
NZ rates surge across the whole yield curve; 5-year swap rate now up over 200bps for the year.
NZD struggles in September as USD strength broadens
The USD showed broad gains on weaker risk appetite and another hawkish tilt by the Fed, sending NZD down 2%
Backdrop for NZD not helped by new global growth potholes, including China growth risks and surging energy prices
Global rates universally higher; NZ rates market well-priced for a series of 25bps hikes over coming months
Full Currency Research is available to BNZ Wholesale clients upon request, please email bnz_research@bnz.co.nz to subscribe.