Kiwi drifts lower but risks remain skewed to the upside
Thursday 11 February, 2021
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand dollar slipped toward 0.72 US cents through trade on Wednesday, drifting lower in what was otherwise a relatively modest trading day across currency markets. US CPI inflation printed below expectations, easing some concerns inflation pressures will mount as recovery builds, and while bond yields were dragged lower there was little reaction in USD value. Having touched intraday highs at 0.7245 the NZD drifted lower overnight marking lows at 0.7200 before near term supports helped it edge higher into this morning’s open. Currently, the NZD buys 0.7210 US cents. With little of note on the day's macroeconomic docket our attentions remain with the broader narrative. As global and domestic macro trends begin to climb upward and economic recovery gathers pace on the back of a global immunisation program, we expect risks will remain skewed to the upside with a move back toward 0.73 a possibility through the months ahead.
Key MoversThe Great British pound outperformed its peers on Wednesday, extending beyond 1.3850 and marking fresh two-year highs at 1.3865. With little to no data on hand to drive direction markets continue to look to the GBP as a key investment target. Whilst currently undervalued there is an expectation the GBP will continue to test resistance handles as its rapid vaccine roll out creates the opportunity for a rapid recovery. The Swedish kroner tested a break below 8.30 in the lead up to the Riksbank policy meeting. Touching highs at 8.28 the SEK quickly shifted back toward the morning’s open and 8.32/8.3250 as Bank Chair Governor Ingves adopted a similar tone to the RBA suggesting policymakers are in no hurry to roll back monetary policy supports, adding he expects to see inflation overshoot normal target bands for a period before it considers tightening financial conditions. With little of note on today’s docket our attentions turn to Fed Chair Jerome Powell. With little new data on hand since his last market comment we expect little deviation from the current narrative.
- NZD/USD: 0.7150 - 0.7260 ▼
- NZD/EUR: 0.5890 - 0.5980 ▼
- GBP/NZD: 1.8980 - 1.9320 ▲
- NZD/AUD: 0.9280 - 0.9390 ▼
- NZD/CAD: 0.9080 - 0.9210 ▼