Daily Currency Update

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Global markets on edge as tensions rise in the Middle East

NZD - New Zealand Dollar

The New Zealand dollar fared better than most G10 currencies on Monday as a risk off mood in global markets was maintained to start the week. Tensions escalated on the weekend between the United States and Iran as the local currency opened at 0.6955 on Monday morning.

Lows of 0.6645 were seen at the close of domestic play before recovering in overnight movements to gain 0.1% on the day as a broad selloff on the greenback occurred.

The New Zealand dollar opens this morning at 0.6671 with the latest GDT price index due for release on Tuesday evening. We expect support levels to hold on moves approaching 0.6640, while any upward push will likely meet resistance at 0.6700.

Key Movers

Safe haven assets were the best performers overnight as investors bought back into Gold following escalating tensions in the Middle East. Gold hit a fresh six year high to $1,588 an ounce and the CHF/USD climbed 0.4% higher on the day. The US Dollar Index (DXTY) was 0.25% lower as it struggles to push through the 97.00 barrier.

One of the key movers overnight was the Great British pound rising 0.72% against the greenback as investors will be watching the return of Parliament tomorrow following the festive season break. Sterling will be driven again by Brexit agreement discussions and EU trade talks as it is all but expected that UK’s withdrawal agreements will be signed off by parliament later this month.

Trade Balance and Non-Manufacturing PMI in the United States slated for release this evening is the key agenda items of note.

Expected Ranges

NZD/USD: 0.6640 - 0.6700 ▲

NZD/AUD: 0.9580 - 0.9650 ▲

GBP/NZD: 1.9600 - 1.9950 ▲

NZD/EUR: 0.5920 - 0.5980 ▼

NZD/CAD: 0.8625 - 0.8680 ▼