New Zealand Dollar bounces off 0.6400 as risk dominates the markets
Daily Currency Update
The New Zealand Dollar moved very little (0.6414 – 0.6449) against the U.S dollar on Friday during the local session, with the Kiwi unable to focus on anything domestic, the NZD/USD pair was dragged lower during the offshore session touching 0.6402. Having moved higher by 1.5 cents earlier on in the week touching 0.6533 the pair witnessed a sell-off as a resurgence in new coronavirus cases in the US threaten to halt the progress in reopening the US economy. With risk dominating the markets and the performance of the Kiwi remains tightly linked to investor risk sentiment especially against the Greenback downside risk remains strong. Also adding to this is the RBNZ also mentioned that the currency’s strength as a drag to the recovery of the economy fueling expectations that negative interest rates will ultimately be deployed in New Zealand, their aim is to curb further NZD appreciation.The domestic calendar is very light this week, Tuesday’s see ANZ Business Confidence and Wednesday sees Building Consents. The NZD is likely to move off the back of offshore news and with rising COVID-19 cases not only in the US, but parts of Europe, the Kiwi is vulnerable. From a technical perspective, the Kiwi is currently trading at 0.6414. We would expect to see support on moves approaching 0.6380 and 0.6300, while any upward push will likely meet resistance at 0.6470.
Key Movers
The US Dollar Index which measures the strength of the Greenback against a basket of six major currencies was relatively unchanged on Friday. US coronavirus cases saw the largest daily rise in six-weeks whilst Florida and Arizona had their largest daily rise of infections. The state of Washington has paused its staged reopening amid concerns. US domestic data added to the downbeat tone, Personal Spending underwhelmed, rebounding by 8.2%, less than the 9.3% jump forecasted. This was still a sharp increase on April’s record -12.6% drop. Meanwhile, US Consumer Confidence also came in under expectations at 78.1 in June, missing forecasts of 79.2. Whilst this is only a slight difference it is seen to be an important one as confident consumers spend money which is essential for the US economy to recover quickly. On the flip side, a nervous consumer is unlikely to spend so freely and will hold back the economic rebound leading to a more drawn-out recovery.The Cable is lower once again touching 4-weeks lows of 1.2314 on Friday driven by a rally of the US Dollar across the board. The GBP also lower against the EUR getting close to critical resistance levels of 0.9100 and CHF dropped to its lowest levels since March at 1.1687
Expected Ranges
- NZD/USD: 0.6300 - 0.6470 ▼
- NZD/EUR: 0.5660 - 0.5770 ▼
- GBP/NZD: 1.9050 - 1.9400 ▼
- NZD/AUD: 0.9330 - 0.9390 ▼
- NZD/CAD: 0.8720 - 0.8840 ▲