NZD, USD best in May; GBP struggles
The NZD/USD was the best performer as markets closed out May, rising 1.4% over the month after the Reserve Bank of New Zealand signalled the potential for further rate hikes.
In contrast, the Aussie underperformed, falling 0.2% over the month, after a weak unemployment reading and softer inflation reduced the likelihood of additional tightening.
Elsewhere, the British pound was the worst performer in May, with GBP/USD down 1.1% amid leadership speculation that weighed on UK PM Keir Starmer.
The US dollar was broadly higher, gaining 0.7% over the month, supported by firmer oil prices and geopolitical tensions as markets awaited news of a more durable ceasefire between the US and Iran.
Kiwi at three-month highs as rate hike bets ramp up
New Zealand’s central bank governor signalled that the OCR is likely to rise sooner and by more than previously indicated. While growth may soften and near-term inflation could tick higher amid global uncertainty, the priority remains returning inflation to target without unnecessary economic disruption.
Separately, the assistant governor emphasised that all options remain on the table for the July meeting — including a 50bp move — and noted that the recent split decision reflected timing rather than direction.
OIS markets reacted quickly, now pricing around 21bp of tightening for July.
NZD/USD is trading near three-month highs, while NZD/AUD is at a two-month high and NZD/JPY at a two-year high.
On the topside, 0.6000 remains the next key level for NZD/USD. On the downside, the 21-day EMA at 0.5892 provides initial support, followed by the 50-day EMA at 0.5882.
Crucial US jobs data and global PMIs
The economic calendar is packed heading into the first week of June, with US employment data taking centre stage. Key releases include Wednesday’s ADP employment change, followed by Friday’s nonfarm payrolls and unemployment rate. These will be critical for assessing labour market tightness and wage pressures as central banks remain vigilant.
A range of activity indicators is also due, starting Monday with China’s manufacturing PMI and the US ISM manufacturing report. This is followed by the US ISM services index on Wednesday, offering further insight into business activity across both major sectors.
Eurozone inflation will remain in focus with preliminary CPI data on Tuesday. On the growth front, Australia’s Q1 GDP is released on Wednesday, which could spark volatility in the Australian dollar and influence broader currency markets.
Kiwi leads gains after RBNZ
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 1 – 5 June
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
