Home Daily Commentaries Kiwi rebounds as run on tech stocks and equities eases and risk demand returns

Kiwi rebounds as run on tech stocks and equities eases and risk demand returns

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar outperformed through trade on Wednesday, recouping Tuesday’s losses to fall just short of a break above 0.67. The rout in equity markets faded overnight and investors chased risk assets higher dragging the NZD off lows at 0.66 to touch intraday highs at 0.6690. With little headline data on hand to trigger the rebound it is clear sentiment continues to dominate direction as investors largely ignore underlying fundamentals. The NZD enjoyed strong gains against safe haven assets rallying against the JPY, a key cross, to test 71. With little of note on today’s macroeconomic calendar attentions turn to US unemployment claims and the ECB’s monetary policy statement and press conference. We expect few changes from either data set and anticipate sentiment will continue to govern direction. A break above 0.6690/0.6710 could prompt an extended run back toward 0.68 US cents.

Key Movers

The US dollar slipped off four-week highs on Wednesday amid improved risk sentiment and a Euro upside. The singe currency found support Tuesday ahead of today’s ECB policy meeting. Reports emerged ECB policy makers were confident in the state of the European recovery and optimistic the regions recovery is on track. With little change expected in regional forecasts we expect minimal changes in the official outlook, allowing the ECB to maintain the current program of QE. With the risk of a dovish surprise removed the Euro pushed back through 1.18 to touch intraday highs at 1.1831 before edging lower into this morning open.The Great British Pound struggled to respond to the improve risk backdrop as fears new British legislation on post Brexit plans would derail Brexit talks. Despite a statement from EU official confirming they would not suspend talks at this point the pound failed to break back above 1.30. As talks continue we anticipate heightened GBP volatility with investors adjusting expectations for a trade agreement.Attentions today remain squarely affixed to the ECB press conference with little else of note on the macroeconomic docket, while equity performance and broader market sentiment will continue to drive direction.

Expected Ranges

  • NZD/USD: 0.6590 - 0.6730 ▲
  • NZD/EUR: 0.5610 - 0.5690 ▲
  • GBP/NZD: 1.9280 - 1.9720 ▼
  • NZD/AUD: 0.9130 - 0.9220 ▲
  • NZD/CAD: 0.8720 - 0.8830 ▲