Daily Currency Update
NZD - New Zealand DollarThe New Zealand Dollar has traded with a tight 19-pip range against the Greenback on Wednesday, moving between 0.6491 and 0.6510. The high was witnessed after the release of local Retail Sales numbers, which grew beyond market consensus. Sales grew 0.7% during the first quarter, following a strong increase of 1.7% in the December quarter. Higher spending at department stores, on hardware and building supplies this summer helped boost overall spending. Disposable incomes have also been boosted by increases in government spending, including the Government’s Families Package. These figures are an important input into Q1 GDP as they make up about 60% of private consumption and the Reserve Bank hopes to lift inflation by aiding increased spending among households and companies.There are no scheduled releases on the data front. From a technical perspective, the NZD/USD pair is currently trading at 0.6495. We continue to expect support to hold on moves approaching 0.6460 while now any upward push will likely meet resistance around 0.6510 and 0.6540 levels.
Key Movers
The EUR came under renewed downward pressure last week as an escalation in US-China trade tensions reminded markets that the euro area finds itself in a particularly vulnerable position should US-China trade talks collapse. Adding to US-China related uncertainty, the European elections might ignite Euro weakness. The European parliament election over 23-26 May (result will be out Sunday evening) looks likely to be a market-relevant event this time. The election result could have an effect, especially on Italian politics, triggering government changes or further confrontation between EU and Italy, posing a weakening pressure on EUR in the medium term. The pair is current changing hands at 1.1155 against the Greenback. Over in the UK, the GBP/USD touched a 4-month low of 1.2624 on reports suggesting the UK Prime Minister was going to be resigning by the end of the business day 22nd May after Andrea Leadsom, Leader of the House of Commons resigned over the PM’s Brexit plan and saying she no longer believes in the governments approach. It’s fair to say there is chaos within the UK government over Brexit which will keep the Pound under selling pressure. The latest FOMC minutes have indicated a patient approach in setting interest rates in the near-term and the markets view is that US rates will remain where they are for now.
Expected Ranges
- NZD/USD: 0.6430 - 0.6540 ▼
- NZD/EUR: 0.5770 - 0.5870 ▼
- GBP/NZD: 1.9400 - 1.9600 ▼
- NZD/AUD: 0.9420 - 0.9480 ▼
- NZD/CAD: 0.8680 - 0.8780 ▲