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Kiwi resilient as all eyes turn to inflation report

NZD - New Zealand Dollar

The NZD again offered little to excite investors through trade on Thursday, proving surprisingly resilient in the face of a wider risk sell off. The Kiwi bounced between tightened support and resistance bounds at 0.6580 and 0.6610 as investors appeared reluctant to extend moves ahead of today's CPI inflation print. The broader expectation is for increased inflationary pressure through December across headline consumer products, supporting the RBNZ’s shift to a neutral policy setting following a swift easing period through the latter half of 2019. A strong print should be NZD supportive and may help foster a break above resistance at 0.6625 and 0.6650, however some upside is already priced in following last weeks ANZ inflation gauge report. A bigger swing could come in the wake of a surprise softening. A weak print will drive kiwi below current supports and likely ignite calls for renewed monetary policy easing as concerns global growth will again remain lacklustre through 2020.

Key Movers

Traditional safe havens were the primary benefactors through trade on Thursday with both the Japanese Yen and Swiss Franc trending upward as investor nervousness sapped broader market demand for risk.

Sterling extended the weeks upturn and built on month long highs as the risk of a central bank rate cut continued to fade. A string of stronger than anticipated macroeconomic data sets have quelled calls for immediate Bank of England policy action with investors now pricing in a 50/50 chance of a rate cut next week, down from 70% on Monday. Having touched 1.3152 sterling edged marginally lower into the New York close as risk off sentiment swept the market. Attentions now turn to today’s manufacturing and services PMI prints as the last key data piece prior to the January 30 BoE policy meeting.

The Euro trended lower following the ECB policy meeting and pricing review announcement. While the Lagarde and her policy setting committee left rates and QE unchanged they announced a wide sweeping policy review. With rates unlikely to change in the near term the Euro consolidated moves below 1.11 as a dip in consumer confidence compounded moves. Having touched 1.1035 the Euro opens this morning at 1.1055

Expected Ranges

NZD/USD: 0.6530 - 0.6680 ▲

NZD/EUR: 0.5910 - 0.6020 ▲

GBP/NZD: 1.9610 - 2.0050 ▼

NZD/AUD: 0.9560 - 0.9720 ▲

NZD/CAD: 0.8580 - .8680 ▼