Daily Currency Update

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Kiwi finds near-term support and could form a break toward 0.65

NZD - New Zealand Dollar

The New Zealand dollar was bolstered through trade on Friday, advancing to two and a half month highs and pushing through 0.6450. The NZD closed the week 1.2% higher having forced the USD toward 3 month lows as broad based US dollar weakness coupled with optimism surrounding US/China trade talks and a paring of RBNZ interest rate expectations helped fuel demand for the Kiwi dollar.

Having touched 0.6457 the NZD opens this morning marginally lower buying 0.6435 US. Cents. The Kiwi represents good short-term value as a lack of follow through in the aftermath of a string of stronger fundamentals coupled with heavy short positioning opens the door to a possible extension in upside gains in the short to medium term. A consolidated break above 0.6450 could prompt an extension toward resistance at 0.65.

Attentions now turn to this Tuesday’s RBA policy meeting ahead of next weeks RBNZ policy announcement while US services data and ongoing trade negotiations drive broader market optimism and risk demand.

Key Movers

The US dollar fell through trade on Friday as mixed domestic macroeconomic data sets coupled with a renewed backdrop of improved global appetite for risk forces investors away from the world’s base currency and haven asset. Stronger than expected non-farm payroll numbers offset a third consecutive monthly decline in US ISM manufacturing data. Concerns about a slowing US economy have weighed on the greenback through recent weeks with investors and analyst closely watching key macroeconomic indicators as marked for future Fed policy.

Sterling crept marginally higher through trade on Friday, fuelled primarily by broader USD weakness and a firming belief a no deal Brexit has been avoided. Domestic PMI data did little to move the currency, despite enjoying its strongest month since April as attentions remain squarely affixed to Brexit headlines and election updates. The Brexit party has promised to contest every seat in the upcoming election, dismissing calls for them to sit back and avoid risking damage to the ruling Conservatives majority. Opening at 1.2926 we expect sterling will remain largely range bound through the short term, fluctuating on headline news until a clear path and/or direction is formed.

Christine Lagarde speaks for the first time as ECB president on Tuesday. Attentions will be closely attuned to any shift in rhetoric to that of her predecessor as she looks to tackle division within the ECB.

Expected Ranges

NZD/USD: 0.6380 - 0.6480 ▲

NZD/EUR: 0.5730 - 0.5790 ▲

GBP/NZD: 1.9930 - 2.0280 ▼

NZD/AUD: 0.9230 - 0.9330 ▼

NZD/CAD: 0.8280 - 0.8480 ▲