Risk off rally sees Kiwi back above 65 US cents
Daily Currency Update
The New Zealand dollar opened just below the 65 US cent handle on Thursday morning as little domestic news saw the Kiwi trade in a 15-point range. Trading at levels not seen since October 2018 lows, the New Zealand dollar remains under pressure with expectations that the RBNZ could cut the official OCR rate by 0.25% and record lows this year. Market expectations are currently pricing in a 100% chance of a cut by November this year, potentially putting further pressure on the local unit.A brief risk off rally spurred the Kiwi higher in offshore markets overnight, reaching a high of 0.6526 following a selloff on the greenback as both flash services and manufacturing PMI in the United States disappointed.
From a technical perspective, the Kiwi currently trading at 0.6525 as investors look towards today's NZ Trade Balance figures due for release this morning. We continue to expect support to hold on moves approaching 0.6485 while now any upward push will likely meet resistance at 0.6580.
Key Movers
The US Dollar was the main mover overnight as a risk off rally in markets saw the greenback dip against all G10 currencies. The US Dollar Index (DXY) pulled back from intraday highs of 98.37 to 97.85 on early morning trading as the ongoing trade war between the United States and China battles on. Stagnating Manufacturing and Service PMI figures in the United States did no favours to the worlds most traded currency as the US private sector output fell to a three year low in May.Investors turn their attention to the European markets as polls close across the continent for the 2019 European elections. Expectations that the EUR/USD cross could see more volatility over the coming days. With elections occurring once every five years, it is anticipated that the rise of Eurosceptic parties could gain over 1/3 of all votes as social unrest is seen within the Eurozone.
On the agenda today sees the release of Retail Sales in the UK along with United States Core Durable Goods orders to close off the week.
Expected Ranges
- NZD/USD: 0.6480 - 0.6580 ▲
- NZD/EUR: 0.5800 - 0.5900 ▲
- NZD/AUD: 0.9400 - 0.9500 ▲
- GBP/NZD: 1.9200 - 1.9600 ▼
- NZD/CAD: 0.8740 - 0.8850 ▲