Daily Currency Update

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Kiwi stumbles as risk on mood falters

NZD - New Zealand Dollar

The New Zealand dollar fell through trade on Tuesday, forced lower as a risk off mood permeated markets. Investors looked to absorb recent gains and cash in on profits following the extended rally enjoyed through the last 2 weeks. Having touched intraday highs at 0.6580 the kiwi retreated, falling below 0.65 and touching intraday lows at 0.6470. Markets optimism waned marginally through Tuesday as ANZ’s business confidence report showed little improvement through early June. While the swift deterioration in business conditions has moderated bouncing off April lows, indicators still sit near historical lows, highlighting just how weak the economy is.

Attentions today turn to the Federal Reserve and FOMC policy meeting. With little else of note on the calendar we expect a relatively quiet domestic session.

Key Movers

The US dollar recorded its ninth consecutive daily depreciation, despite a broader risk-off shift. As markets looked to haven assets the CHF appeared the destination of choice while the JPY recovered recent losses, forcing the USD back below 108 to touch 107.70. With the CHF and JPY enjoying gains through the week thus far there is a sense the recent risk-on mood may be shifting opening the door for another run on haven currencies. That said the USD remains under selling pressure with investors pivoting away the world’s base currency as fears the US is in for a long and protracted economic and public health crisis continue to grow.

The Euro extended gains above 1.13 on Tuesday, forcing the dollar index lower as investors pounced on comments from German Finance Minister, Olaf Scholz, wherein it was suggested discussion surrounding the 750billion Euro recovery plan were progressing well, giving the impression that a deal/agreement will be reached in the near term. Touching 1.1358 the Euro now sits nearly 6 cents above lows touched in mid-May and appears poised to take advantage of further USD weakness with a push toward 1.15 now in sight.

Expected Ranges

NZD/USD: 0.6380 - 0.6580 ▼

NZD/EUR: 0.5680 - 0.5850 ▼

GBP/NZD: 1.9320 - 1.9720 ▲

NZD/AUD: 0.9320 - 0.9420 ▲

NZD/CAD: 0.8680 - 0.8780 ▼