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Kiwi range bound in wake of RBNZ shock dovish shift

NZD - New Zealand Dollar

The New Zealand dollar offered little to excite investors through trade on Friday struggling to break outside a 30-point trading band as sellers took profit on extensions beyond 0.68. A bump in equities and risk appetite weren’t enough to dispel the pessimism suffered in the wake of the RBNZ shock dovish shift, as Governor Orr doubled down on Wednesday accommodative bias, confirming the board is pleased with the market’s reaction.

With little of note on the domestic docket through Monday, attentions turn to Wednesday housing market data and GDT dairy auction. Strong reads could support an extension beyond resistance at 0.6820 while softness could force the kiwi to extend losses and gap lower, testing 3 month supports at 0.6750.

Key Movers

The pound pushed lower through trade on Friday, shifting below 1.30 after British lawmakers rejected PM May’s Brexit plan for a third time, pushing the UK closer to an unorderly exit and forcing the pound toward its biggest monthly loss since November. Having touched 1.2992 Sterling found support but struggled to extend even short-term upside into close as uncertainty and nervousness plague investors, hampering any real upward momentum. With so much unknown, traders are now sitting back, sidelining larger plays and perhaps exacerbating short term moves. We expect Sterling will continue to fluctuate within recent ranges ahead of larger re-positioning on definite Brexit strategy.

A slew of US data sets should support short term USD upside as the recent sell off and end to policy support gives way to stronger underlying macroeconomic fundamentals. Despite the Fed’s shift away from a message of patience US data sets remain ahead of the global curve and growth remains weak outside the US. Our attentions this week turn to Retail Sales, Core Durable Goods Orders, ADP employment change and Non-Farm Payroll data. Strength across the board could help strength the risk on trend with further direction stemming from US China Trade talks.

Expected Ranges

NZD/USD: 0.6750 - 0.6830 ▼

NZD/EUR: 0.6020 - 0.6120 ▲

GBP/NZD: 1.8950 - 1.9450

NZD/AUD: 0.9480 - 0.9660 ▼

NZD/CAD: 0.9010 - 0.9105 ▼