Daily Currency Update
NZD - New Zealand DollarThe New Zealand dollar followed the CAD higher through trade on Wednesday buoyed by an uptick in risk demand following the inauguration of Joe Biden as the 46th President of the United States. While the Biden administration has promised to revoke a series of Trump policies from day one, markets are optimistic the promise of fiscal stimulus and a tough and thorough plan of action against COVID-19 will provide the opportunity for recovery through the 2nd half of the year. Having broken resistance at 0.7120 the NZD extended gains toward intraday highs at 0.7175.With little of note on today's domestic docket, our attentions turn to the Bank of Japan, ECB and US unemployment claims as markers for direction ahead of tomorrow's quarterly inflation print.
Key Movers
The Canadian dollar led gains across majors through trade on Wednesday following the Bank of Canada policy meeting. While the BoC opted to maintain its current policy setting commentary from Governor Macklem, promising to support the economy through the pandemic and uphold the current cash rate until the ”economic slack is absorbed” helped bolster demand for the loonie. The US dollar retreated in the face of a risk on backdrop giving up gains across the board, while the euro underperformed ahead of today’s ECB policy meeting. We expect the ECB will preserve the status quo, however any signal from ECB President Lagarde the Bank is concerned by lackluster growth outlook could spark expectations for extended QE moving through H1. With German, French, Euro area and US PMI data due Friday we are keenly attuned to any divergence in economic performance.
Expected Ranges
- NZD/USD: 0.7050 - 0.7210 ▲
- NZD/EUR: 0.5850 - 0.5950 ▲
- GBP/NZD: 1.8920 - 1.9280 ▼
- NZD/AUD: 0.9210 - 0.9305 ▲
- NZD/CAD: 0.9020 - 0.9090 ▼