NZD shows a steady slide south in September
• Higher energy prices, strong US economic data and tighter global monetary policy drove global rates to fresh multi-decade highs.
• The USD strengthened but the NZD significantly underperformed, weighed by the RBNZ’s ill-fated decision to signal a pause in the rate hike cycle after only two hikes, seeing NZ rate increases lag global moves.
• The NZD fell to new milestone lows on many crosses and the NZ TWI fell nearly 4% to a 15-year low.
An air of apathy in August
Market movements across most asset classes were well contained through August. Alongside the Northern Hemisphere summer lull, the US-Iran conflict remained in stalemate. Global equities continued to post fresh record highs, supported by stronger earnings and untroubled by modestly higher global bond yields. The NZD was relatively flat against a backdrop of low FX volatility. The JPY was the weakest major currency, as the impact of late-July official intervention faded, while the AUD outperformed as markets shifted towards expecting further RBA tightening.