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Kiwi moves higher after RBNZ’s release of its bank capital review

NZD - New Zealand Dollar

The New Zealand dollar is stronger this morning when valued against the Greenback and the USD continues to drift lower and has now fallen for five consecutive trading sessions. The Kiwi is up 0.25% over the past 24 hours on the back of the Reserve Bank on New Zealand watered down some aspects of its bank capital requirements, with the NZD jumping from 0.6520 to 0.6560, a fresh four-month high. The upshot is that instead of needing $20 billion of new capital sourced solely from equity, banks now need to find $11 billion of equity and can stump up the remaining $9 billion through issuing preference shares. Capital requirements are the most important component of the Reserve Bank’s regulatory framework for banks.

There are no scheduled releases today in New Zealand. From a technical perspective, the NZD/USD pair is currently trading at 0.6548. We continue to expect support to hold on moves approaching 0.6510 while now any upward push will likely meet resistance around 0.6570.

Key Movers

The Greenback fell for a fifth straight session on Thursday, undermined by recent weaker-than-expected U.S. economic data and this week’s robust performance by the euro and the British pound. On the release front yesterday in the US the trade deficit came in better than expected to its lowest level in nearly 1-1/2 years in October to $47.2 billion, the smallest since May 2018. Initial claims for state unemployment benefits, on the other hand, dropped 10,000 to a seasonally adjusted 203,000 for the week ended Nov. 30, the lowest level since mid-April. Looking ahead to Friday’s employment data release and the US economy is expected to have added 180K new jobs in November after adding 128K in October. The unemployment rate is foreseen steady at 3.6%, while wages’ growth is also seen within familiar levels, up by 0.3% MoM and by 3.0% when compared to a year earlier.

Expected Ranges

NZD/USD: 0.6450 - 0.6650 ▲

NZD/AUD: 0.9450 - 0.9650 ▲

GBP/NZD: 2.0000 - 2.0200 ▲

NZD/EUR: 0.5800 - 0.6000 ▲

NZD/CAD: 0.8550 - 0.8750 ▲