Home Daily Commentaries Risk off vibe forces NZD below 0.71 US cents

Risk off vibe forces NZD below 0.71 US cents

Daily Currency Update

NZD - New Zealand Dollar

The New Zealand dollar was one of the worst performing major units through trade on Thursday, slipping back below 0.71 US cents amid a broader risk off vibe. With little of note on hand to drive direction through the domestic session, the NZD track sideways, bouncing between 0.7105 and 0.7120 before being surging toward intraday highs at 0.7150 on the back of a softer than anticipated US CPI print. The Kiwi was, however, unable to hold onto gains and swiftly retreated through 0.71 to touch intraday lows at 0.7080. The currency appears well-supported on moves approaching this handle and as markets consolidate positions, we expect the NZD will track broader USD moves and bounce between 0.6950 and 0.7150 through the immediate near term.

The NZD continues to outpace its antipodean counterpart, closing in on a break above 0.97 AUD cents. Yesterday’s dovish commentary from RBA Governor Lowe highlighted the widening gap in central bank policy and opens the door for further NZD upside in the short term as we look to next month's OCR rate statement.

Key Movers

A risk off vibe drove price action across major currencies through trade on Tuesday, bolstering demand for the JPY, CHF and USD while forcing commodity currencies lower. The US dollar shifted sharply lower in the wake of CPI data before risk appetite helped drive the world’s base currency higher into this morning’s open. Both headline and core inflation undershot market expectations for August, with core inflation correcting off 30-year highs and moderating back to 4%. Key components to last month's rise retreated through August as the Delta variant continues to rip through the US and hold back domestic demand. The softening in CPI data highlighted the challenges facing a broader recovery and have forced some analysts to extend the timeline of recovery.

Our attentions today turn to Canadian CPI data, while US industrial production and capacity utilisation headline the macroeconomic docket.

Expected Ranges

  • NZD/USD: 0.7050 - 0.7150 ▼
  • NZD/EUR: 0.5980 - 0.6040 ▼
  • GBP/NZD: 1.9380 - 1.9520 ▲
  • NZD/AUD: 0.9620 - 0.9710 ▲
  • NZD/CAD: 0.8970 - 0.9030 ▲