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NZD punches back through 0.70 amid risk on rally

NZD - New Zealand Dollar

A risk on rally has helped propel the NZD back through 0.70 US cents overnight, marking intraday highs at 0.7040. Having drifted aimlessly through the domestic session, struggling to break above 0.6970, the NZD surged higher through the early hours of European trade, sustaining gains into this morning ‘s open. There appears little catalyst for the risk on run outside a softening in US PPI data and a correction in US yields. Investors backed stocks and risk assets, prompting the largest single day appreciation for the S&P 500 in 7 months. The NZD led gains across major currencies, up over 1% against the USD and 1.4% against the yen, while enjoying strong support against the EUR, GBP and CHF.

With little of note on today’s macroeconomic ticket our attentions remain with the broader narrative to see if this risk on run is extended or investors look to take stock into the weekly close.

Key Movers

There was plenty of price action across major currencies through trade on Thursday, as investors chased stocks higher in a broader risk on run that extended across commodity currencies. A marginal downturn in US PPI data and a correction in US yields saw the USD give up ground across the board early, with the euro punching back through 1.16 and sterling testing a break above 1.37. Neither currency was able to hold onto gains, as uncertainty surrounding central bank action prompted a broader sell off. The recovery against the euro and GBP, and an extension against the yen saw the US dollar index drift only marginally lower on the day, down just 0.1% despite strong gains across the CAD, NZD and AUD. The Japanese yen was by far the worst performer as the USD marked new highs touching 113.70, prompting even bigger moves against key crosses, with the NZD surging toward 80 and the AUD consolidating a break above 84.00. Our attentions remain with the broader risk narrative and any signal markets may look to extend the rally into the weekly close.

Expected Ranges

NZD/USD: 0.6940 - 0.7080 ▲

NZD/EUR: 0.5980 - 0.6120 ▲

GBP/NZD: 1.9370 - 1.9620 ▼

NZD/AUD: 0.9430 - 0.9520 ▲

NZD/CAD: 0.8630 - 0.8750 ▲