Daily Currency Update

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Kiwi slide continues as investors chase short positions

NZD - New Zealand Dollar

The New Zealand Dollar fell through trade on Tuesday, extending a shift below 0.67 to make fresh 6-month lows at 0.6645. The NZD fell victim to a broad-based USD uptick wherein the worlds base unit touched a year to date high despite the absence of significant headline data events. The extended sell off comes on the heels of speculators stretching short positions on expectations the RBNZ will cut rates at some point in the coming months, following the central banks shift to a dovish bias in March. Having fallen below 0.67 the Kiwi sits below medium-term fair value estimates leaving the door open for a short-term recovery, assuming monetary policy remains unchanged.

With little of note on the docket today and markets commemorating ANZAC day on Thursday we expect the NZD will struggle to make any significant moves away from the current trend as liquidity through the public holiday remains thin and attentions turn to US GDP data Friday for direction into the weekly close. Watch support 0.66/0.6630 and resistance on moves toward 0.6730.

Key Movers

The US dollar rallied through trade on Tuesday making year to date highs as investors opted into the worlds base currency following the extended Easter weekend. The dollar index jumped nearly four tenths of a percent to touch is highest level since June 2017 at 97.622 as new home sales reversed a recent downtrend to touch one and a half year highs. The uptick in home sales comes on the heels of stronger than expected retail sales and export growth through March, easing pressure on US growth concerns in the lead up to Friday Q1 GDP Print.

The Euro fell below 1.12 for the first time in three weeks before edging higher into the close while sterling’s slide continued as optimism surrounding Brexit talks between Prime Minister May and the opposition fade as May faces mounting pressure to quit. Slipping below 1.295 GBP volatility remains low and while we expect knee jerk reactions to emerging headlines ranges between 1.2900 and 1.32 should be maintained as long as the status quo remains intact.

Expected Ranges

NZD/USD: 0.6600 - 0.6730 ▼

NZD/EUR: 0.5480 - 0.5950 ▼

GBP/NZD: 1.9380 - 1.9580 ▲

NZD/AUD: 0.9360 - 0.9450 ▲

NZD/CAD: 0.8880 - 0.8950 ▲