NZD marks new 3-month high, but can it break US$0.63
Friday 25 November, 2022
Daily Currency UpdateThe New Zealand dollar extended its upward rally marking fresh 3-month highs amid sustained demand for risk and a broad downward correction in the US dollar. Having tracked largely sideways through the domestic session the NZD pushed through US$0.6260 marking intraday highs just shy of US$0.6290 overnight. With US markets closed for Thanksgiving, overnight trade volumes remained thin and investors appeared content in maintaining the week's risk-on trend while absorbing a dovish FOMC meeting minutes. Having fallen just short of a break above US$0.6290 the NZD has retreated on lead into this morning’s open buying US$0.6266 at time of writing. The NZD enjoyed a series of higher highs and lower lows in recent weeks; the question now is whether the NZD can extend this upward run. Having sustained a remarkable recovery since marking 24-month lows in September, the NZD is poised to make a break above the all important 200 day moving average and US$0.63. We anticipate a period of consolidation as technical signals suggest the recent upturn may be overdone, particularly given key headline risk events remain on the horizon. Our attentions turn to next week's US non-farm payroll update ahead of key US inflation data and the Fed December policy update as critical markers guiding direction into year end.
Key MoversThe US dollar retreated through trade on Thursday, struggling under the weight of the week's risk-on narrative and a further decline across US rates. With US markets closed for Thanksgiving trading volume was thin and US treasuries continue to point downward adding to the 14 basis point fall seen through Monday, Tuesday and Wednesday. With the US under pressure the euro pushed back above €1.04, while the GBP extended its upturn marking a new 3-month high at £1.2150 before edging lower into this morning’s open. Against a backdrop of lower rates the JPY enjoyed sustained support as the USD consolidated a break below ¥140, marking session lows below ¥138.25. With little of note on today’s ticket our attentions remain with the risk narrative for direction into the weekly close. Having come under sustained pressure through the last 2-3 weeks we anticipate a period of consolidation ahead of key risk events through early December.
- NZD/USD: 0.6180 - 0.6300 ▲
- NZD/EUR: 0.5950 - 0.6050 ▲
- GBP/NZD: 1.9180 - 1.9450 ▲
- NZD/AUD: 0.9220 - 0.9320 ▼
- NZD/CAD: 0.8280 - 0.8420 ▲