NZD rises to a fresh 2024 high in September
• The Fed opted to kick-start its easing cycle with a 50bps cut; China ramped up policy stimulus to drive an economic recovery
• High risk appetite and lower US rates drove a broadly weaker USD; most FX majors made fresh 2024 highs against the USD
• Rates curves steepened as the global easing cycle gained traction; global equities pushed up to a fresh record high
August ascent after July Jolt for NZD
• After a volatile start, calm was restored to markets in August; by month-end the episode was long-forgotten.
• Despite the RBNZ significantly bringing forward the rate cutting cycle, the NZD outperformed, rising 5% against the USD.
• NZD crosses were all stronger, making up for the poor performance over July; NZD/JPY traded a range of over 8 big figures.
July Jolt
• Commodity currencies underperformed on weaker risk appetite and lower commodity prices; NZD/USD fell 2.3% to 0.5950.
• The RBNZ’s dovish pivot provided an added NZD headwind, with a sharp narrowing in NZ-global rate spreads.
• Short yen positions unwound resulting in a sharp recovery in the JPY; NZD/JPY plunged nearly 9%.