Daily Currency Update

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Kiwi caught between support and resistance

NZD - New Zealand Dollar

The New Zealand dollar closed higher on Thursday recouping some of the losses suffered following a mixed corporate confidence report. Extending above short-term resistance the Kiwi touched intraday highs at 0.6665 before stronger than anticipated US macroeconomic data drove the world’s base currency high, forcing the kiwi back toward 0.6630/40.

With little of note on today’s domestic economic calendar attentions again turn offshore with Chinese GDP, Industrial Production and Unemployment data headlining a crowded international docket. Strength across Chinese economic indicators, when coupled with optimism enjoyed in the wake of the first phase of trade negotiations, could prompt some NZD support and facilitate another push toward 0.67. That said we expect current support and resistance handles to remains intact and envisage the kiwi will continue to underperform when compared against medium term fair value estimates. Watch support on moves below 0.66 and 0.6580 with selling opportunities on moves approaching 0.6670/80.

Key Movers

The US dollar index advanced through trade on Thursday, driven largely by a downturn in Euro/USD. Improvements across US retail sales, Manufacturing, Employment claims and the housing market all helped reduce pressure on the Fed to lower interest rates and highlighted the large gulf between US and European monetary policy options. The Euro tested key support handles and the 200day moving average touching 1.1130.

The Great British Pound edged higher on the day edging back through 1.3050 before stalling on moves approaching 1.0390/1.31. With short term resistance firmly entrenched at these levels our attentions turn to domestic retails sales data a possible catalyst to force a break. A soft read will only affirm recent poor readings across a suite of economic indicators and add mounting pressure on the Bank of England to lower interest rates as earlier as January 30.

Expected Ranges

NZD/USD: 0.6580 - 0.6680 ▲

NZD/EUR: 0.5930 - 0.6010 ▲

GBP/NZD: 1.9480 - 1.9880 ▼

NZD/AUD: 0.9570 - 0.9660 ▲

NZD/CAD: 0.8630 - 0.8700 ▲