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Kiwi maintains levels above 66 US cents

NZD - New Zealand Dollar

The New Zealand dollar failed to capitalise on greenback weakness after rallying just during the domestic session on Wednesday. Opening the morning at 0.6606, the local unit saw gains of nearly 1% to intraday highs of 0.6667. This follows RBNZ Assistant Governor Christian Hawkesby’s speech on “Maintaining credibility in times of change”, which was released to the public from his discussion last week in Tokyo. Comments dampened expectations of further cuts by the central bank in 2019 despite markets currently pricing a 90% chance of a further interest rate cut in September this year.

The Kiwi managed to close higher despite been sold off in overnight movements as markets look domestically to ANZ Commodity prices.

From a technical perspective, the Kiwi is currently trading at 0.6623. We continue to expect support to hold on moves approaching 0.6560 while now any upward push will likely meet resistance at 0.6670.

Key Movers

Bullish momentum for the US Dollar stalled overnight as ADP Non-Farm Employment numbers came in at a dismal 27,000 jobs added from April to May. This month’s print was well short of expectations of 189,000 jobs. Pressure mounts on the Federal Reserve to start cutting rates with markets pricing a 75% chance of a cut in July. The US Dollar Index (DXY) has fallen from 2019 highs last Friday of 98.28 to overnight lows of 96.75.

Gains were seen to 97.20 in North American markets following a positive ISD Non-Manufacturing PMI release showing the non-manufacturing sector grew in May to 56.9 vs 55.5 in April. The World Bank also put further fear into the global economy as GDP forecasts were cut from 2.9% to 2.6% with the IMF warning of a 0.5% cut to its 2020 forecast of 3.6%

Attentions now turn to this evening ECB interest rate decision where it is expected the main finance rate will remain at 0%. ECB President Mario Draghi is widely expected to maintain his dovish stance with inflation currently well below target levels. Traders were pre-positioning themselves on Wednesday after pulling off from EUR/USD 1.1310 highs overnight to open this morning at 1.1230.

Expected Ranges

NZD/USD: 0.6600 - 0.6700 ▲

NZD/EUR: 0.5870 - 0.6000 ▲

NZD/AUD: 0.9450 - 0.9550 ▲

GBP/NZD: 1.9000 - 1.9400 ▼

NZD/CAD: 0.8850 - 0.8950 ▲