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Currency Market Analysis

Jul 15, 2021 | Currency Market Analysis

Global Themes

Kiwi jumps as RBNZ begins tightening; Aussie jobs in focus

The NZDUSD jumped to one-week highs yesterday after the Reserve Bank of New Zealand said it would begin to wind back stimulus from next week.

The RBNZ’s money-printing program, the Large Scale Asset Program, would see new purchases end from 23 July.

The bank also said that some of its worries about deflation and unemployment have now receded as the path of “least regrets” would see the RBNZ reduce policy support.

Some NZ forecasters brought forward rate hike expectations to as soon as August.

USD weaker

The USD was weaker in other markets with Federal Reserve chairman Jerome Powell striking a more cautious tone on the US economy and suggesting interest rates need to remain low for the foreseeable future.

Aussie jobs

The early focus today is on Australian employment due at 9.30am.

The Australian dollar could be pressured by today’s job numbers with the Sydney lockdown, and a cautious Reserve Bank of Australia, creating a perfect storm for AUD losses.

While the Sydney lockdown is unlikely to figure in the numbers, the impact of the shutdown will be front-and-centre.

The Sydney lockdown, which began on 26 June, probably won’t seen in the report, with the survey likely completed by 20 June.

However, this month’s number will form a base for expectations ahead of next month’s result. A weaker number on Thursday sets up a major disappointment in the July numbers.

Later, Chinese GDP is due at 10.00am.

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