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New Zealand Dollar opens at 4-week highs against the U.S Dollar

NZD - New Zealand Dollar

The New Zealand Dollar was another currency that benefited last week on hopes a Brexit deal will help mitigate risks of a recession within the EU trading bloc. The NZD/USD pair jumped to its highest level in 4-weeks touching 0.6390 just before the New York session closed on Friday as Greenback weakness was witnessed against most major currencies. Also lending some support are the continued talks between the US and China on their preliminary trade deal.

Looking ahead, the economic calendar is very light locally this week, today sees New Zealand’s Credit Card Spending for September where economists are expecting a drop to 6.0% from 5.1%. Wednesday is NZ Trade Balance numbers which could see the Kiwi volatile. Brexit headlines will be the key driver for movements in the NZD this week. From a technical perspective, the NZD/USD is currently trading at 0.6376, we expect support to hold around 0.6330 and 0.6300. On the upside, immediate resistance sits at 0.6390 followed by 0.6440.

Key Movers

It was a quiet on the macro front with no releases in the U.S scheduled, the U.S Dollar took direction mostly from offshore events which saw weakness on the DXY and close at 97.14, a level not witnessed since early August. Traders remained cautious after Chinese GDP data showed the negative impact the US-China trade war has had on China. We were predicting a slowdown of GDP in Q3 from 6.2 percent to 6.1 percent year-on-year with the actual number contracting further to 6.0 percent as additional tariffs put a leash on growth. The US–China trade war is clearly hampering the economy with exports contracting 0.4% as the U.S. began imposing an additional 15% tariff on $110 billion worth of consumer goods from Sept 1st. Imports declined 6.5% for the quarter. EUR/USD rallied to a near two-month high of 1.1169 while the USD/JPY cross-rate dropped to 108.38.

Meanwhile, in the UK, most of the Britain waited for more updates on Brexit. British MP’s voted over the weekend to postpone a decision on whether to back Prime Minister Boris Johnson’s Brexit deal with the EU. Some lawmakers fear, if the deal passes the legislation to implement it might not be ready by October 31, the date the U.K. would be scheduled to leave the EU. They say there is a possibility the U.K. could be forced to exit the European Union "on no-deal terms." The GBP/USD cross-rate closed the week at 5-month highs at 1.2973.
The UK parliament is voting today on the new Withdrawal Agreement as agreed between the UK government and the European Union.

Expected Ranges

NZD/USD: 0.6330 - 0.6440 ▼

NZD/AUD: 0.9270 - 0.9360 ▲

GBP/NZD: 2.0200 - 2.0560 ▲

NZD/EUR: 0.5660 - 0.5760 ▼

NZD/CAD: 0.8270 - 0.8420 ▲