NZD marks new 3-month high and eyes new elevated trading range
Daily Currency Update
The New Zealand dollar climbed through trade on Monday, marking fresh 3-month highs and testing a break above US$0.61, in what was otherwise a largely uneventful start to the week. In the absence of major newsflow and headline data markets looked to extend pre-Thanksgiving moves and the risk-on shift. Equities edged higher and US treasuries fell across the yield curve forcing the USD lower across the board.Having touched highs at US$0.6106, the NZD is now trading between US$0.6090 and US$0.61. The recent extension pushes the NZD above the 200-day moving average and affords us greater confidence in pricing in a higher trading range through the end of the year.
Our attention turns now to Wednesday’s RBNZ policy decision and rate statement. We expect rates will be left on hold, thus the accompanying commentary on future rate hikes and RBNZ growth outlook will help shape direction through the back half of the week.
Key Movers
The Japanese yen outperformed through trade on Monday, buoyed by a decline in US treasuries and a broader retreat in global rates. US treasuries are down 3-5 basis points across the curve as 2- and 10-year rates retrace gains won through September and October while European yields fell 10 points and UK gilts 7-basis points. The USD slipped back below 149, giving up nearly half a per cent to trade at 148.90. The euro and GBP are little changed trading at 1.0955 and 1.2630 respectively.Our attention turns now to US consumer confidence data and commentary from key FOMC members. With Fed policy expectations driving direction activity data and policymakers' underlying tone will prove key in shaping near-term direction. Markets remain incredibly sensitive to anything that could reshape the current policy narrative and an uptick in consumer sentiment followed by hawkish commentary could be enough to help spur USD demand and temper gains enjoyed by other majors through the last 2 weeks.
Expected Ranges
- NZD/USD: 0.6020 - 0.6120 ▲
- NZD/EUR: 0.5500 - 0.5600 ▲
- GBP/NZD: 2.0500 - 2.0800 ▼
- NZD/AUD: 0.9150 - 0.9250 ▲
- NZD/CAD: 0.8250 - 0.8350 ▲