Kiwi maintains narrow range in quiet start to the week
Tuesday 25 August, 2020
Daily Currency UpdateThe New Zealand dollar trended sideways through trade on Monday, maintaining a narrow range and bouncing between 0.6525 and 0.6565. Positive sentiment continued to control direction with markets largely ignoring negative developments, a fact highlighted by a plunge in NZ retail sales. Consumer spending in the second quarter dropped by nearly 15%, a record decline and a clear sign of the damage lockdown measures have on consumer spending patterns. While early indicators suggest a strong rebound through Q3 thus far, the level 3 lockdown in Auckland has been extended through to the end of the Month, further crimping the economic recovery and adding heightened pressure on struggling economy and GDP estimates. With little of note on the docket today we expect the currency will remain range bound, driven by fluctuations in risk trends.
Key MoversMoves across currency markets were largely muted through trade on Monday with most majors maintaining a narrow range against the world’s base currency. The Euro tested 1.1850 before retreating toward 1.18/1.1790 and remains largely unchanged on open this morning, while the Yen bounced between 105.70 and 106. The Great British Pound moved back below 1.31 and fell against the Euro as concerns mount over a lack of progress in Brexit negotiations. Both sides admitted little progress was made in the last round of negotiations with both sides apportioning blame on the other. With the deadline date looming ever closer fear the stalemate will not be broken in beginning to mount, capping Sterling upside. While markets are refraining from making bets on direction the longer negotiations continue without a deal being struck the more volatility we are likely to see. Attentions this week turn to the Bank of England and any sign it will cut interest rates below zero. We expect they will keep rates on hold at 0.1% for now, leaving the door open for further monetary policy adjustments in the future.
- NZD/USD: 0.6480 - 0.6620 ▲
- NZD/EUR: 0.5480 - 0.5590 ▼
- GBP/NZD: 1.9880 - 2.0130 ▼
- NZD/AUD: 0.9090 - 0.9150 ▼
- NZD/CAD: 0.8580 - 0.8690 ▲