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Kiwi finished the week where it started

Daily Currency Update

NZD - New Zealand Dollar

Friday’s session saw the New Zealand dollar fall from 0.7070 to trade below the key 0.7000 handle at 0.6997. With the pair opening around this level last week, the New Zealand dollar was flat against the greenback despite a week jam packed with central bank updates. It was a similar story for the Australian dollar on Friday which fell from 0.7300 to 0.7236 before recovering to trade around the 0.7260 handle. Despite the Australian dollar's weakness, the New Zealand dollar’s underperformance pushed the AUD/NZD cross rate higher to 1.0360.

Although Monday is set to be a quiet one, the week ahead is littered with further speeches from central bankers in the USA, Europe and the UK, which will be closely watched after last weeks developments. Fed governor Powell is set to speak Tuesday night with markets wanting to see further colour on the hawkish policy outlook in last week's FOMC meeting. We also have the European Central Bank forum taking place this week. The forum has previously been used, most notably by former ECB president Draghi as a platform for key announcements and will therefore be watched closely by EUR traders. Bank of England Governor Bailey is also expected to speak at the forum.

NZD/USD opens this morning above the 0.7000 handle but remains vulnerable to another move below this key psychological level. If we get another break below 0.7000 and minor support at 0.6980, USD sellers could be eyeing the August low of 0.6800. Next targets on the upside are 0.7100 and the September high of 0.7160.

Key Movers

As we alluded to above, the main story being digested by markets and moving prices has been the raft of hawkish updates from central bankers last week. Last week’s hawkish FOMC meeting was reinforced by known hawk, FOMC member Meister who on Friday confirmed her status as one of the 9 voters who are in favors of a 2022 rate hike. She sees economic conditions being rate hike supportive in 2022 and favours a start to tapering quantitative easing in November.

The unfolding energy price situation in the UK is another moving part driving price action in financial markets. The spiraling energy prices have weighed on the GBP, which finished the week 0.5% lower against the greenback as the markets begin to price in the expected drag on domestic economic growth.

Expected Ranges

  • NZD/USD: 0.6980 - 0.7100 ▼
  • NZD/EUR: 0.5940 - 0.6040 ▼
  • GBP/NZD: 1.9360 - 1.9550 ▲
  • NZD/AUD: 1.0300 - 1.0400 ▲
  • NZD/CAD: 0.8820 - 0.8900 ▼