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Kiwi breaks 0.66 as Greenback remains under pressure

NZD - New Zealand Dollar

Against a softer Greenback the New Zealand Dollar has managed to reach its highest point in a month, touching 0.6620 overnight. Opening this morning at 0.6606, the Kiwi held most of its’ gains overnight despite very little on the domestic calendar to drive momentum.

There was some domestic news however with the GDT Dairy Auction confirming that the dairy price index fell 3.4% after a strong run, likely indicating a turning point from the peak. The Kiwi did briefly trade on the news although the larger impacts came again from global macro concerns. The Kiwi is firstly being pulled in a negative direction as global growth continues to be sluggish and commodity prices remain under pressure. On the other end of the spectrum however is the weaker US Dollar with has come under pressure as the world’s largest economy begins to slow and trade concerns begin to bite. This fall in the Greenback has been the main driver for the upbeat Kiwi.

Moving into Wednesday the New Zealand Dollar continues to keep a close eye on development stories globally with little on the domestic calendar to digest.

Key Movers

The United States Dollar continued to trade under pressure despite positive bounce backs in the equity and rates markets. The relief came from a number of fronts with the Federal Reserve conference and improvements in the Mexico situation. Fed Chair Powell kicked the good vibes off with some soothing words for the market. Powell outlined the Fed’s willingness to cut rates if needed over trade tensions saying “we are closely monitoring the implications of these developments for the US economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labour market and inflation near our symmetric 2% objective”.

On the trade war front there are reports that US lawmakers were looking for ways to block Trump’s planned tariffs on Mexico. Meanwhile, Mexican President Obrador expressed optimism on negotiations with the US and said there’s an 80% chance that Mexico will avoid tariffs. On the China front however, news was less rosy with China issuing a travel alert for citizens intending to travel to the US. There are also reports that American luxury brands are already feeling the pinch with Tiffany and Co reporting that sales to Chinese tourists has fallen 25%.

With the mixed results for different parts of the economy the Greenback hasn’t reversed course and remains under pressure despite some important developments.

Expected Ranges

NZD/AUD: 0.9413 - 0.9492 ▲

NZD/CAD: 0.8815 - 0.8886 ▼

NZD/EUR: 0.5831 - 0.5899 ▼

NZD/GBP: 0.5170 - 0.5232 ▲

NZD/USD: 0.6576 - 0.6637 ▼