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NZD unable to sustain brief foray above 0.70 US cents

Wednesday 6 April, 2022

Daily Currency Update

The New Zealand dollar finished flat on Tuesday, unable to sustain a brief break above 0.70 US cents. The NZD had tracked sideways for much of the domestic session as markets rebuked attempts to push above 0.6950 ahead of the RBA policy update. The Australian Central bank's hawkish undertone and subtle shift in language helped drag the NZD through resistance and above 0.70 for the first time in nearly 6 months. Having touched intraday highs at 0.7030 midway through the overnight session, the NZD preceded to give back gains as markets chased the dollar higher on hawkish commentary from Fed Governor Brainard. With the currency trading again at 0.6940, our attentions turn to the Fed’s latest minutes for any insight into balance sheet reduction and interest rate forward guidance ahead of next week’s RBNZ policy update.

Key Movers

The AUD was the day's best performer up over 1.5% at one point before commentary from Fed Governor Brainard prompted a USD recovery. Brainard, an FOMC voting member and the next vice-chair of the Federal Reserve offered a hawkish assessment of current economic conditions and the market latched onto comments regarding balance sheet reduction. Brainard suggested given the recovery has moved ahead of expectations a considerable and rapid reduction in the balance sheet, beginning in May is warranted. The comments forced the euro through 1.0950 toward supports at 1.09 while the GBP slipped below 1.31 to mark intraday lows at 1.3070 and the yen gave up 123 as the USD surged to session highs above 123.60. With little of note on today’s ticket, our attentions remain on monetary policy expectations ahead of next week's RBNZ, RBC and ECB monthly policy meetings.

Expected Ranges

  • NZD/USD: 0.6920 - 0.7030 ▲
  • NZD/EUR: 0.6330 - 0.6430 ▲
  • GBP/NZD: 1.8680 - 1.8920 ▼
  • NZD/AUD: 0.9120 - 0.9220 ▼
  • NZD/CAD: 0.8650 - 0.8750 ▲