The Kiwi maintained a tight trading range on Tuesday, hovering between 0.6430 and 0.6460 against the greenback and opens this morning buying 0.6469 US cents. The worlds base currency fell against most of the majors during the US session as yields retreated from Friday’s seven-year highs, ultimately allowing the NZD and the AUD to post modest gains. AUD/NZD traded in a 20-pip range between 1.0970 and 1.0990 as relative economic growth and strong gains in key commodities such as iron ore and crude oil continue to favor the Aussie.
We did have some positive news out of the domestic economy yesterday with NZ’s fiscal accounts demonstrating an operating surplus on 1.9% of GDP for FY18 and ANZ’s monthly inflation gauge suggesting next week’s CPI print will be strong. With markets pricing a 25% chance of a rate cut by August next year, a strong print will render this scenario very unlikely.
Looking to the day ahead, we have second tier data in the form of electronic card transactions for NZ whilst offshore cues will be taken from from NY Fed president Williams before we get UK GDP and US PPI numbers tonight. On the technical front, NZD/USD remains well supported at the 0.6350 level with any topside momentum expected to meet resistance on moves approaching 0.6480.