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Kiwi in holding pattern ahead of the FOMC

NZD - New Zealand Dollar

The New Zealand Dollar continues to remain tightly range-bound, opening this morning relatively unchanged at 0.6412. With little to drive global markets at present, the Kiwi finds itself moving sideways. There was some news domestically however with the GDT dairy auction showing a smaller than expected fall in the price index, down 0.2% but also showing a 2.1% rise in whole milk powder that helped offset the fall.

Moving into Wednesday, the Kiwi is set to enjoy a quiet day on the domestic economic calendar. There will be some news from North American however with Canadian CPI and the FOMC meeting minutes due overnight.

Key Movers

Global markets have been mostly benign over the last few days with little to drive direction. Nevertheless, there was some news out of Europe that pundits are keeping a close eye on.

Italy’s political scene has flared up again with news that Conte has resigned as Italy’s Prime Minister after a falling out with the anti-immigration Salvini. Previously, Salvini has called for a snap election which the market reacted poorly too. With a possible re-shuffle of the Government on the cards without an election, the market actually took the news in a positive light but nevertheless, the instability is keeping markets on edge.

On the Brexit front, Prime Minister Johnson continues to push an attempt of re-negotiation with a letter penned to the EU on the Irish backstop. The letter claimed the backstop is undemocratic and did not provide an alternative solution. The letter was poorly received by the EU with President Tusk saying, “The backstop is an insurance to avoid a hard border on the island or Ireland unless and until an alternative is found…those against the backstop and not proposing realistic alternatives in fact support re-establishing a border even if they do no admit it”. The Sterling weakened considerably after Tusks’ comment, falling to as low as 1.2065 but subsequently recovered by 0.4% after Germany’s Chancellor Merkel provided a more conciliatory sound bite, “We will think about practical Brexit solutions”. Both the Euro and Sterling rose after Merkels comments.

Expected Ranges

NZD/AUD: 0.9422 - 0.9498 ▼

NZD/CAD: 0.8501 - 0.8583 ▼

NZD/EUR: 0.5734 - 0.5802 ▼

GBP/NZD: 1.8922 - 1.8999 ▲

NZD/USD: 0.6374 - 0.6449 ▼