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New Zealand dollar rallies on Fed President comments

NZD - New Zealand Dollar

In the absence of any local data the NZD/USD moved sideways within a 20-point range on Thursday before offshore events caught the pairs eye and headed north. The New Zealand dollar rallied overnight touching a high of 0.6784 on the back of comments from the New York Federal Reserve President John Williams saying overnight that the Fed should keep rates lower for longer.

Looking ahead, the economic calendar has New Zealand’s Credit Card Spending for May where economist are expecting a drop to 5.4% from 6.6%. From a technical perspective, the NZD/USD is currently trading at 0.6770, we expect support to hold around 0.6720 and 0.6700. On the upside, resistance sits at 0.6800 and 0.6840.

Key Movers

The US dollar Index which measures the strength of the Greenback against a basket of six major currencies has dropped 0.6% touching 96.68 following comments from the New York Federal Reserve President John Williams, he said “take swift action when faced with adverse economic conditions” and “keep interest rates lower for longer” when you do lower rates. The Fed is widely expected to lower rates at the end of the month because even though the economy is doing pretty well, risks are rising from general business uncertainty and trade policy worries.

The Sterling rose against the Greenback after an unexpected rise in Retail Sales, volume of sales grew by 1% in June compared with the previous month, the data was strong enough to push the GBP/USD towards to 1.25 mark. The rise was mainly due to non-food stores increasing sales in the home-improvements sectors and second-hand goods. Despite this, the pound is set to weaken further as Brexit and politics overshadow economic fundamentals.

Expected Ranges

NZD/USD: 0.6700 - 0.6830 ▲

NZD/AUD: 0.9550 - 0.9640 ▼

GBP/NZD: 1.8350 - 1.8700 ▼

NZD/EUR: 0.5960 - 0.6040 ▲

NZD/CAD: 0.8750 - 0.8860 ▲