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NZD breaks 0.68 as commodity prices hit record highs

Friday 4 March, 2022

Daily Currency Update

Volatility continues to plague financial markets as the Russia-Ukraine war extends into a second week with fears “the worst is still to come”. A risk off move again enveloped investors through trade on Thursday forcing bond yields and equities lower, while another surge in key commodity prices overnight underpinned a NZD break above 0.68 US cents. The NZD has proved remarkably resilient in the face of heightened volatility and uncertainty, buoyed by a surge in key commodity prices amid rising supply shortages. Having drifted sideways for much of the domestic session, the NZD found some upward momentum overnight extending through 0.68 to mark intraday highs at 0.6810, while enjoying significant gains against the euro and the GBP. Our attentions remain affixed to developments in Ukraine as the tug of war between commodity prices and weaker risk demand ensure a broader correction is contained.

Key Movers

Unsurprisingly the euro was the days big mover, marking fresh 18 month lows as fears the war in Ukraine will have ramifications that spillover into Europe and the European economy, dampening previous optimism surrounding the broader pandemic recovery and ECB outlook. Sanctions and the shock of elevated energy prices forced the single currency toward lows below 1.1040, while the Great British pound sunk below 1.3350 to intraday lows at 1.3320. The DXY dollar index rallied 0.35% on the day, buoyed by the softer euro and GBP. The USD remains flat against the JPY and CHF, fellow safe haven counterparts, and continues to relinquish ground to key major commodity led currencies. Our attentions remain affixed to developments in Ukraine as macro data takes a back seat as we move into the weekend.

Expected Ranges

  • NZD/USD: 0.6720 - 0.6830 ▲
  • NZD/EUR: 0.6050 - 0.6190 ▲
  • GBP/NZD: 1.9580 - 1.9820 ▼
  • NZD/AUD: 0.9250 - 0.9320 ▼
  • NZD/CAD: 0.8520 - 0.8650 ▲