New Zealand Dollar has a glimpse of 71c before retreating
Monday 14 December, 2020
Daily Currency UpdateThe New Zealand Dollar has had a wild ride last week, the NZD/USD tested multi-year highs on Friday touching 0.7113 after a combination of mixed domestic data reports and US Dollar weakness. The REINZ House Price Index for New Zealand, which measures the changing value of property in the market increased 15.3% year-on-year to 3,343 a new high on the index showing just how confident the market is at the moment. Meanwhile New Zealand BusinessNZ manufacturing rose to 55.3 ending 2020 on a positive note and Food Prices have increased by 2.6% in the year ending November 2020, (but fell from October). The rise was driven by fruit and veg rising nearly 10% followed by restaurant meals and ready-to-eat food increasing by 3.9%.
Unfortunately, demand for safe-havens saw the Kiwi retreat back under 71c to close the week at 0.7083. There are no scheduled data releases today, eyes will be on Thursdays GDP growth data. The release is projected to have risen after the very severe Q2 slump, although there is some risk of the actual figure falling short of the upbeat consensus expectations. On the technical front, the Kiwi is currently trading at 0.7080, we see 0.7050 as near-term support followed by 0.7000. On the upside, expect to see resistance on moves approaching 0.7110.
Key MoversFollowing a six-year low on the US Dollar Index (DXY) earlier last week, the DXY managed to rebound by Friday to hover around 90.95. Gold ended a roll coaster week higher as talks in the U.S. Congress for a COVID-19 fiscal stimulus package hung in the balance. Congress had originally passed in March the CARES Act which provided relief to many businesses and qualifying citizens, this is now all about to expire in a matter of weeks. The Democrats and Republicans have been locked in a dispute over how much stimulus the US economy needs, what form it should take and how it should be doled out.
The GBP continues to feel under pressure with the GBP/USD cross-rate falling further in the week touching a low of 1.3134 on Friday. As the Brexit deadline approached on the weekend Boris Johnson appeared ready to embrace a no-deal Brexit and prepared the Royal Navy gunboats to defend UK fishing waters. Talks continued through Sunday with the European commission president Ursula von der Leyen, where both parties have agreed that negotiators would go "the extra mile" in the next few days to reach a trade deal agreement that would guarantee Britain zero-tariff and zero-quota access to the EU's single market.
The EUR/USD moved sideways last week consolidating just above the 1.21 handle on Friday. We saw the pair travelling upwards to 1.2160 following the ECB stimulus increase however, on Friday a dovish speech by the ECB saying that they would be ‘vigilant’ on the exchange rate and will continue to monitor developments noting that recent appreciation put downwards pressure on Eurozone price growth saw the pair retreat.
- NZD/USD: 0.7000 - 0.7120 ▲
- NZD/EUR: 0.5790 - 0.5900 ▲
- GBP/NZD: 1.8280 - 1.8900 ▼
- NZD/AUD: 0.9340 - 0.9500 ▼
- NZD/CAD: 0.8960 - 0.9120 ▲