Daily Currency Update

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Kiwi caught between support and resistance as it struggle to break a period of underperformance.

NZD - New Zealand Dollar

The New Zealand dollar struggle to break outside a 50 point range through trade on Wednesday, bouncing between 0.6585 and 0.6225. The NZD touched its lowest level in almost a month at 0.6583 before finding support and bouncing of supports to push back through 0.66. The NZD sits between key short term technical support and resistance handles with the 100 hour moving average at 0.6620 providing resistance in the absence of any headline domestic data events. The kiwi failed to enjoy any upside in the aftermath of the signing of phase 1 of the US/China trade deal despite the uptick in broad based risk appetite and we anticipate the NZD will remain range bound in the absence of a catalyst that will drive a break outside the recent bounds.

Attentions today turn to US core retail sales while Chinese GDP headlines Friday’s docket. A downturn in US consumer spending could amplify calls for the FOMC and Federal Reserve to cut interest rates sooner rather than latter prompting a USD downturn and potentially driving the NZD nearer fair value.

Key Movers

The signing of the US/China trade deal headlined market news through trade on Wednesday amplifying broad based demand for risk and helping foster an uptick across risk-based assets with the AUD and CAD leading commodity currencies higher against the USD.

The Great British Pound edged lower through trade on Wednesday testing a break below 1.30 following softer than anticipated inflation data. Consumer Prices rose at their slowest pace in three years in December advancing just 1.3% amplifying calls for the Bank of England to advance the timeline on loosening Monetary Policy. Having touched 1.2987 Sterling found some support in the wake of the US/China trade deal signing but remains under pressure as domestic economic performance continues to falter. Attentions now turn to Friday’s retail sales for deeper insight into economic health. Another soft read will all but force the BoE to lower rates and likely consolidate a move below 1.30.

Expected Ranges

NZD/USD: 0.6580 - 0.6630 ▼

NZD/EUR: 0.5880 - 0.5980 ▼

GBP/NZD: 1.9580 - 1.9850 ▲

NZD/AUD: 0.9530 - 0.9630 ▼

NZD/CAD: 0.8590 - 0.8650 ▼