Daily Currency Update

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Kiwi range bound despite broader risk on tone

NZD - New Zealand Dollar

The New Zealand Dollar advanced through trade on Monday, buoyed by a renewed risk on mood, as investors chased growth and commodity currencies higher amid positive COVID-19 vaccine trials. AstraZenica and Oxford Universities trial of 1,077 participants reportedly produced encouraging results with patients producing key viral antibodies and T-cells designed to seek out and combat infected cells. With no serious side effects identified researchers are preparing to progress to the next stage of clinical trials with the hope of having a vaccine ready for distribution by the end of the year. The NZD jumped back through 0.6550 touching intraday highs at 0.6580. Despite the improvements in market sentiment risk appetite has moderated through recent weeks, capping gains for the NZD and preventing a push back above 0.66 US cents. The currency has begun to lag behind other risk assets, and we anticipate trading ranges will remain narrow with the NZD underperforming through the short term. With little of note on the docket this week attentions remain with broader risk trends, in the absence of a wholesale shift in risk demand we expect the kiwi to bounce between 0.6430 and 0.66.

Key Movers

The USD edged lower through trade on Monday amid a backdrop of optimism driven by positive COVID-19 vaccine trials and a resurgent Euro. The Euro touched four-month highs, jumping above 1.1450 after EU leaders agreed on distributing 390 billion of the 750 billion proposed recovery fund as grants to the worst hit member states while the remaining 360 billion will be parceled into low interest rate loans. The proposed agreement is a huge step forward in a united Europe and bolstered markets hopes the EU will continue to be proactive in tackling the problems raised by the COVID-19 crisis. Having touched intraday highs at 1.1467 the single currency opens marginally lower at 1.1444.

With little of note on the macroeconomic docket this week, attentions remain with fiscal support plans and COVID-19 headlines. Discussions between democrats and republicans regarding a proposed 1 trillion dollar economic relief bill continue through the week with delays possibly adding to safe-haven bids on the dollar.

Expected Ranges

NZD/USD: 0.6480 - 0.6600 ▲ 

NZD/EUR: 0.5680 - 0.5780 ▲

GBP/NZD: 1.9080 - 1.9320 ▲

NZD/AUD: 0.9420 - 0.9505 ▲

NZD/CAD: 0.8850 - 0.8930 ▼