Daily Currency Update

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Kiwi steady as a partial trade deal looks likely

NZD - New Zealand Dollar

The New Zealand dollar held steady overnight as risk sentiment appears to have improved on easing trade war tensions. Opening the morning at 0.6296, a brief rally was seen to intraday highs of 0.6325 despite a lack of any domestic macroeconomic data releases.

A partial trade deal looks to be on the cards as a Chinese official has told Bloomberg they confident of wrapping up positive talks this week. A partial deal will stall any further breakdowns and limit further damage to an already souring relationship. China has offered to increase their agricultural imports as long as United States President Donald Trump does not impose any more tariffs on goods.

The New Zealand dollar paired all gains overnight and opens this morning at 0.6290. We expect support levels to hold on moves approaching 0.6250, while any upward push will likely meet resistance at 0.6330.

Key Movers

The Federal Reserve Meeting Minutes were released this morning showing the majority of policymakers were in support of a 25-bps cut in the September meeting. The outlook is somewhat uncertain though as to how many further cuts they are willing to make as several policymakers noted forward guidance might be needed.

Slowing growth and trade war uncertainty continue to be the main themes released by central banks globally with the CME FedWatch tool pricing an 83% chance of a further 25bps rate cut at this month’s meeting on October 30th.

There was little movement on the Dollar Index following the news. The USD/JPY cross jumped 0.37% higher on the day on trade deal hopes. Markets participants look towards the release of Core inflation this evening in the United States along with the latest release of ECB Monetary Policy Meeting Accounts.

Expected Ranges

NZD/USD: 0.6250 - 0.6330 ▼

NZD/AUD: 0.9300 - 0.9400 ▼

NZD/EUR: 0.5700 - 0.5770 ▼

NZD/CAD: 0.8350 - 0.8420 ▼