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NZD seesaws near monthly highs

NZD - New Zealand Dollar

Tuesday’s offshore sessions saw a consolidation in global risk appetite as equity markets were lower and the haven USD was higher. This saw the New Zealand Dollar initially trade lower at 0.6520 before recovering to 0.6575. Given the escalating situation in Victoria, the AUD/NZD cross was forced lower, slipping from 1.0630 to 1.0609 and opening up the door for a move below 1.06.

Yesterdays data docket delivered a better than expected GDT dairy auction with the GDT price index rising 8.3%. The auction data supported the NZD’s recovery at a time when risk sentiment was stabilising. There was also some second tier data highlighting a 1.3% rise in house prices in the three months to June. This has seen the annual house price inflation number retreat and is an indication that the housing market is losing some steam despite record low interest rates.

Looking ahead to today's data light session, we still see 0.6580 as a key topside obstacle for NZD/USD in the short term. Downside supports have emerged around 0.6380, with any moves below this level expected to meet solid trend-line support around 0.6200.

Key Movers

Taking a global look at the overnight session which seemingly had it all, the USD index was 0.3% higher across the board as risk sentiment consolidated as US-China trade tensions simmered and the strength of the US economic recovery was questioned. News that US Secretary of State, Mike Pompeo was looking at banning Chinese social media app TikTok and concerned comments from Fed official Bostic about what the recent spike in COVID-19 cases meant for the economic recovery stifled risk sentiment globally.

The Euro underperformed, falling from 1.1310 to 1.1260 before recovering slightly. The GBP was the best performer on the day, rising 0.6% against the greenback to trade around 1.12560 ahead of this week's Brexit negotiations.

Expected Ranges

NZD/USD: 0.6510 - 0.6580 ▲

NZD/EUR: 0.5775- 0.5825 ▲

GBP/NZD: 1.9060 – 1.9290 ▲

AUD/NZD: 1.0580 - 1.0640 ▼

NZD/CAD: 0.8850 - 0.8940 ▲