NZD - New Zealand Dollar
The New Zealand dollar edged higher overnight, buoyed by a sustained risk on move that drove equities to fresh highs. After a lacklustre local session the NZD tested resistance at 0.6450, touching intraday highs at 0.6458. With little change in the current narrative the NZD benefited from an upturn in risk demand and quarter end rebalancing. The S&P 500 closed nearly 1% higher, marking its best quarterly performance in more than 20 years and highlighting just how quickly markets have rebounded from the panic that enveloped investors at the beginning of the Coronavirus outbreak. Having outperformed nearly all major counterparts throughout Q2 the NZD now appears set for a period of consolidation. The steam has seemingly run out of risk on rally and while the promise of central bank supports helps prop up financial markets, the uncertainty surrounding the pace of economic recovery amid the throes of an alarming uptick in coronavirus infections continues to weigh on investors and cap topside gains. We anticipate the kiwi will enjoy a period of choppy risk/headline driven trade within tightened ranges throughout Q3 with resistance on moves above 0.65 and approaching 0.66 intact while supports at 0.6380 and 0.63 should hold. The primary threat to supports remains a definitive risk off move triggered by broader lockdowns and deteriorating health conditions.
The Great British Pound was the days top performer on Tuesday, advancing three quarters of a percent after Boris Johnson promised an injection of 5billion pounds into new infrastructure projects in a bid to drive domestic growth and employment. The GBP jumped back through 1.23 and 1.2350 before resistance on moves at 1.2390/1.24 stoppered further gains. Despite the late upturn the Pound was among the worst performers in June as the UK continued its struggle to contain the coronavirus, while hard Brexit fears again loom large with the final divorce date at the end of the year approaching rapidly.
Haven currencies underperformed with the JPY and USD giving up gains as the risk on narrative fuelling equity markets filter into currencies.
Attentions today turn to preliminary US employment data and a host of European and Asian manufacturing data sets. While fundamental still take a back seat to risk, improved manufacturing conditions may over some hope a broader economic rebound is still on track.
0.6380 - 0.6480 ▲NZD/EUR:
0.5680 - 0.5780 ▲GBP/NZD:
1.9080 - 1.9250 ▲NZD/AUD:
0.9330 - 0.9380 ▲NZD/CAD:
0.8710 - 0.8790 ▼