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Soft US inflation print helps Kiwi move higher

Thursday 11 April, 2019

Daily Currency Update

The New Zealand dollar offered little to excite investors through trade on Wednesday, struggling to break outside a 20-point trading band during the domestic session. Opening the morning at 0.6742, the majority of price action occurred overnight as core CPI missed expectations in the United States. NZD/USD highs were seen at 0.6770 with investors now focusing their attention to today’s NZ FPI release and CPI release in China. From a technical perspective, the NZD/USD pair opens this morning 0.3% higher at 0.6763. We continue to expect support to hold on moves approaching 0.6720 while now any upward push will likely meet resistance at the US 68 cent handle.

Key Movers

A number of key releases were seen overnight as both the ECB and Federal Reserve released their monetary minutes overnight. General weakness in the US Dollar was observed as the US core CPI print missed the mark of 0.2%, coming in at 0.1% for the month of March. 10-year yields moved lower to 2.476% with apparel prices the main catalyst for the downbeat print. The yearly headline core CPI print came in slightly lower at 2%. The Euro paired initial losses preluding the release of ECB minutes, taking advantage of USD weakness overnight. The minutes release pointed towards a steady approach to interest rate decisions this year with no rate hikes expected in 2019. EUR/USD sits this morning at 1.1275. The release of FOMC minutes for the month of March was released early this morning where it was signalled there would be a pause in interest rate rises for the time being. A more patient approach is to be taken as the dot plot showed no rate increases for 2019. GDP levels were revised downwards and is expected to pull back from its recent pace. With global growth being a major concern for markets as of late, the CME Fedwatch tool is now pricing a 40% chance that the next move by the Fed will be a cut by January 2020. Thursday looks to be another busy day as investors focus their attention to China as both CPI and PPI figures are due for release. Several FOMC members are due to speak overnight as traders look for any further clues on their stance towards future monetary policy decisions.

Expected Ranges

  • NZD/USD: 0.6725 - 0.6800 ▲
  • NZD/EUR: 0.5950 - 0.6020 ▲
  • NZD/AUD: 0.9400 - 0.9500 ▼
  • GBP/NZD: 1.9100 - 1.9500 ▼
  • NZD/CAD: 0.8960 - 0.9060 ▲