Daily Currency Update

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Kiwi boosted by Fed Reserve decision to cut interest rates

NZD - New Zealand Dollar

The New Zealand dollar was boosted overnight by the Federal Reserve cutting its interest rates again for the third time this year to a range of 1.50% – 1.75% and putting pressure on the greenback. Opening the morning at 0.6355 the local currency initially rallied to 0.6368 following a stronger than expected inflation print by its Trans-Tasman neighbour.

The local currency reached overnight highs of 0.6391 following the Central Bank cut of 25 bps and now looks towards this mornings ANZ Business confidence levels to potentially push through the 64 US cent resistance level.

The New Zealand dollar opens this morning at 0.6389. We expect support levels to hold on moves approaching 0.6340, while any upward push will likely meet resistance at 64 US cents.

Key Movers

The US dollar was the major mover overnight as it dipped against the major G10 currencies following the decision by the Federal Reserve in the United States to cut benchmark interest rates by 25bps for the third time this year to a range of 1.50% – 1.75%. Dropping the line in the policy statement of “Will act as appropriate” signalled an end of future rate cuts and was supported by comments by Fed Governor Jerome Powell that the current stance is appropriate.

Initial movements higher were supported for the US Dollar Index (DXY) to 98.00 as a stronger than expected Advanced GDP print of 1.9% for the third quarter this year was aided by continued consumer and government expenditure. The DXY the moved sharply lower to 97.48 following the Fed Reserve announcement.

Across the globe it was announced in the UK that there will be a general election on December 12th, supporting the Great British Pound in its run up to 1.2900 overnight. The bill flew through the House of Lords, both readings unopposed as the country goes to its first Winter election in nearly 100 years with Brexit firmly in the minds of the public.

Expected Ranges

NZD/USD: 0.6320 - 0.6420 ▲

NZD/AUD: 0.9220 - 0.9280 ▼

GBP/NZD: 2.0000 - 2.0400 ▼

NZD/EUR: 0.5710 - 0.5770 ▲

NZD/CAD: 0.8360 - 0.8440 ▲