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Kiwi falters as the RBNZ contemplates QE

NZD - New Zealand Dollar

Opening this morning at 0.6703, the Kiwi was hit both on-shore and off-shore as Tuesday proved to be a bruising day for the New Zealand Dollar. Kicking things off at home, the Kiwi registered heavy losses during the Asian session as the RBNZ hinted at the potential future use of unconventional monetary policy. While the RBNZ did mention that unconventional policy was still at a very early stage, they did leave the door open for potential use of Quantitative Easing. Adding to the declines was a resurgent Greenback following the bipartisan debt ceiling agreement and tempering of the Federal Reserve’ 50 BP rate cuts.

Moving into Wednesday, Traders now turn to the June Trade Balance data for direction with little otherwise to digest domestically.

Key Movers

The Great British Pound hit a fresh weekly low as domestic data and Boris Johnson led the Stirling to a third consecutive day in the red. Opening this morning at 1.2436, the Pound initially stumbled on the CBI’s industrial trend survey which showed that business optimism fell sharply in June, indicating that domestic industry was facing its biggest slowdown since the GFC. Adding to the Stirling’s woes was Boris Johnson’ confirmation as the next Prime Minister of the United Kingdom. Given he has stated that he would exit the UK with or without a deal with the EU on October 31st, the chances of a hard Brexit have increased.

The United States Dollar had a much rosier story than the Pound overnight as it rose 0.45% to 97.7 on the US Dollar Index. Strengthened by a number of events, the Greenback initially benefited from the bipartisan extension of the US debt limit but also found some momentum from fewer calls favouring a 50BP rate cut by the federal reserve. With the positive momentum behind the Greenback, the Dollar enjoyed its strongest day of the week.

Expected Ranges

NZD/AUD: 0.9531 - 0.9601 ▲

NZD/CAD: 0.8765 - 0.8845 ▲

NZD/EUR: 0.5965 - 0.6045 ▲

GBP/NZD: 1.8519 - 1.8599 ▼

NZD/USD: 0.6661 - 0.6742 ▲