New Zealand Dollar higher on the back of Brexit
Daily Currency Update
In the absence of any local data yesterday, the New Zealand Dollar’s moves were largely driven by Greenback weakness and news of a Brexit deal. The NZD/USD pair opened Thursday’s session just under 63c at 0.6290 and stayed within a tight range for most of the local session. As news emerged overnight that the UK and EU have managed to agree to a new Brexit deal ahead of the EU summit, the NZD/USD broke through 0.6300 and rallied to a high of 0.6354.On the data front, the domestic docket has little to offer today, all eyes will be on China’s GDP figures where economist are predicting a further slowdown in the third quarter from 6.2 percent to 6.1 percent year-on-year. Any deeper contraction would raise concerns about the Chinese economy which might have an effect on the New Zealand Dollar
Adopting a technical viewpoint, the New Zealand Dollar opens this morning at 0.6345. We see initial support at 0.6300 on the downside followed by 0.6260. On the topside, a sustained move above 0.6355 will indicate some buying activity and if there is enough upside momentum then look to a rally towards 0.6385.
Key Movers
The US Dollar saw deterioration overnight against the Pound as reports that the UK and EU had agreed to a new deal ahead of the EU summit. The GBP/USD reached 3 month highs of 1.2989 on the back of the Brexit news. Focus now lies on Saturday where the MPs will vote to whether they back the new deal or not. The Euro had similar sentiment, where we saw a 2% increase in the EUR/USD touching a high of 1.1139 following Brexit news. The overnight developments highlights the importance of Brexit and subsequently the impact optimism can have on the GBP and EUR.Meanwhile, on the data front, UK retail sales softened as British shoppers were more cautious of their spending in the three months to September as raising concerns about the health of the economy in the run-up to Brexit. Looking at the third quarter as a whole, which strips out monthly volatility, quarterly sales growth held steady at 0.6 percent while the annual pace of expansion dropped to 3.1 percent from 3.6 percent in the second quarter, the weakest since the late 2018. Over in the U.S, Federal Reserve business activity fell to 5.6 in October from 12 in September. Economists surveyed the reading at 7.1, any reading above 0 indicates improving conditions.
Expected Ranges
- NZD/USD: 0.6260 - 0.6385 ▲
- NZD/AUD: 0.9260 - 0.9360 ▼
- GBP/NZD: 2.0200 - 2.0600 ▲
- NZD/EUR: 0.5650 - 0.5730 ▼
- NZD/CAD: 0.8250 - 0.8370 ▼