NZD oscillates around 0.6500 handle ahead of RBNZ meeting
Wednesday 24 June, 2020
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand Dollar rose for the second consecutive day as global risk sentiment was boosted by stronger than expected flash PMI’s out of Europe and positive signals from the US government on both the stimulus and US-China trade front. This saw the defensive US Dollar index fall 0.4% on the day, with the NZD/USD rising from 0.6460 to 0.6533 before partially retracing back below the 0.6500 handle to trade at 0.6495. It was a similar story for the Aussie Dollar, meaning the AUD/NZD cross traded in a sideways range between 1.0670 and 1.0690. Looking ahead to today's session, the headline event is the Reserve Bank of New Zealand’s cash rate review. The bank is expected to maintain the current policy setting with little scope for any surprises that could impact markets. Given the speedier than expected recovery from the coronavirus, investors will be looking for the bank to lift some downside risks they pointed to when the outlook was bleaker. Our NZD/USD levels to watch for the session ahead are largely unchanged from yesterday however given the sustained move above the 0.6500 handle, a move through initial resistance at 0.6580 is looking more likely. A move through this would see next level resistance at 0.6750. On the downside, initial support is now seen at 0.6400 with a break below this opening up moves to 0.6200.
Key MoversAlthough we eventually finished the session with positive risk sentiment, Tuesday was a wild ride for risk assets. Investors shed risk assets during Asian trade when headlines surfaced that white house trade advisor Navarro informed news outlets that Trump had made the decision to terminate the China trade deal. This saw risky currencies like the AUD and NZD sold off aggressively and US equity futures much lower. Having since back tracked from his comments and after a raft of better than expected flash PMI’s out of Europe, risk assets recovered to finish the day in positive territory. Global equities were up over 1% on the day and the defensive USD index down 0.4%, representing its second consecutive day of falls. Interestingly, despite the risk on backdrop, the JPY outperformed on the day with USD/JPY falling 0.4% to 106.50. The positive flash PMI’s out of the Eurozone aided the Euro's ascent, with EUR/USD breaking above 1.1310 to touch an intraday high of 1.1348, its highest level since June 16. The positive European story also saw the GBP/USD break through the 1.25 handle, reaching 1.2530 during trade before retreating slightly. And lastly taking a look at the Canadian dollar, USD/CAD saw some fresh selling pressure forcing the pair below the key 1.3500 psychological level. For the day ahead, traders will be closely watching the RBNZ cash rate decision which we touched on above. Data out of China, the Eurozone and the US are also expected to be of interest before some FED speak on the US economy will round out the session.
- NZD/USD: 0.6430 - 0.6580 ▲
- NZD/EUR: 0.5725 - 0.5760 ▲
- GBP/NZD: 1.9140 - 1.9330 ▼
- AUD/NZD: 1.0630 - 1.0700 ▼
- NZD/CAD: 0.8726 - 0.8830 ▲