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NZD marches on breaking 0.71 US cents

NZD - New Zealand Dollar

The New Zealand dollar’s meteoric uptick continued through trade on Thursday as it chased equities higher, taking advantage of a weaker USD to extend beyond 0.71 US cents. Having tracked sideways for much of the domestic session, the Kiwi trended sharply higher overnight as positive sentiment continues to shape demand and drove the S&P 500 and Nasdaq to fresh highs. Having marked 0.7105 profit taking and news Pfizer has been forced to cut its initial vaccine rollout estimate due to supply chain problems, forced the currency back below resistance at 0.7080. Despite the correction, momentum remains firmly with the NZD as the currency continues to enjoy a series of higher highs and higher lows and with little signs the long run USD downturn is slowing our attentions turn offshore for direction into the weekly close. US COVID-19 relief talks continue between republicans and democrats, while US non-farm payroll data provides an early snapshot of the anticipated Q$ retracement. We expect the NZD will continue to bounce between 0.7020 and resistance at 0.7105/10 with risks skewed to the downside should optimism wane on the back of any delay to vaccine availability.

Key Movers

The US dollar plunged to mark a new two and a half year low on Thursday as investors maintain demand for risk assets amid a sustained surge in positive sentiment. Despite reports Pfizers initial vaccine rollout may be cut short thanks to supply chain issues markets remain relatively optimistic widespread immunisation will be available through H1 next year. The Dollar index fell through 91 to touch its lowest level since April 2018 at 90.504. Dollar bears continue to dominate direction as markets anticipate a rapid recovery through 2021.

The euro continued the weeks gains, pushing toward 1.2150, despite calls for the ECB to step in and defend the currency from a rapid depreciation that could derail the recovery. The ECB has flagged it will provide further stimulus to help the Eurozone through the pandemic and our attentions turn to the December 10 meeting for any comment on the recent euro uptick.

The Great British pound was unable to capitalise on broader USD weakness, giving up early gains toward 1.35, amid headlines Brexit talks again failed to move pass key sticking points. The EU is reported to have introduced new mechanisms making it easier to enforce and police a trade agreement after the UK broke trust and international law in breaching the internal market bill. With time fast running out to ratify an agreement before the New Year deadline it is still hard to see these sticking points preventing at least a partial deal being struck, but with every day the deadline is extended, market nerves and the possibility of hard Brexit increases.

Expected Ranges

NZD/USD: 0.7020 - 0.7110 ▲

NZD/EUR: 0.5780 - 0.5850 ▼

GBP/NZD: 1.8820 - 1.9120 ▲

NZD/AUD: 0.9480 - 0.9590 ▼

NZD/CAD: 0.9050 - 0.9160 ▼