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ECB disappoints and overshadows improved trade rhetoric

NZD - New Zealand Dollar

The New Zealand dollar, much like its antipodean counterpart, enjoyed mixed fortunes through trade on Thursday. Buoyed early by news China would implements tariff exemptions on some pharmaceuticals and anti-cancer drugs, while the US waylays the implementation of additional tariff’s the NZD surged toward 0.6450, marking intraday highs at 0.6252. Disappointment with the ECB’s policy announcement then forced the NZD lower, a move compounded by stronger than anticipated US inflation indicators. The kiwi slipped through 0.64 to touch 0.6399 before supports help arrest the downturn.

With little of note on the domestic docket our attentions remain with the ongoing trade narrative and its impact and broader risk demand, while US retail sales data headlines the macroeconomic docket and guides direction into the weekend.

Key Movers

The Euro advanced through trade on Thursday, rallying against the USD and key major crosses after the ECB failed to meet the markets dovish expectations. Having edged lower in the lead up to Thursday’s highly anticipated ECB policy meeting and minimum rate announcement the Euro lurched higher after policy makers announced a 10 basis point cut to interest rates while re-introducing quantitative easing. Markets had largely priced in the 10 basis point cut but were looking for more than the 20 billion Euro a month stimulus package. Investors were expecting the ECB to throw out everything they had in a bid to combat persistent stagflation and lacklustre growth and seemingly were left wanting. Having fallen to 1.0925 the Euro rallied through 1.10 to touch 1.1090 while key crosses suffered heavy mark downs with the AUD falling from 0.6287 to 0.6202 at time of writing.

Expected Ranges

NZD/USD: 0.6350 - 0.6450 ▼

NZD/EUR: 0.5730 - 0.5890 ▼

GBP/NZD: 1.9080 - 1.9420 ▲

NZD/AUD: 0.9270 - 0.9370 ▼

NZD/CAD: 0.6405 - 0.6505 ▲