Daily Currency Update

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Kiwi shrugs off dire labour market print to test 0.67

NZD - New Zealand Dollar

The New Zealand dollar advanced through trade on Wednesday pushing back toward 0.67 before edging lower into this morning’s open. A renewed risk on mood backed by new hopes a COVID-19 vaccine will be ready earlier than first anticipated and strong corporate earnings helped drive the NZD to intraday highs at 0.6674. Investors largely ignored domestic labour market data despite the dire outlook painted. Unemployment and underemployment both jumped sharply through the last quarter, while estimates for labour market performance are expected to worsen with the jobless rate climbing to 10% come year end as nearly 500,000 Kiwi’s come of wage subsidy support at the end of August.

Attentions remain squarely affixed to broader risk trends with US fiscal stimulus developments governing short term fluctuations. With Republican and Democrats still at loggerheads party leaders have earmarked the end of the week as d day for a deal being reached, however with significant partisan roadblocks still in play there are fears talks will be dropped. Watch resistance on moves approaching 0.67 with support in tack on moves below 0.66.

Key Movers

TheUSD was the days big loser, tumbling against a basket of major counterparts amid a sustained risk on mood and expectations of US under performance when valued against other major economies. The dollar index fell back below 93 and stopped short of a break below 92.50, nearing last week’s two year low. Fears US lawmakers will be unable to reach a deal for COVID-19 relief by the end of the week are mounting as partisan differences delay talks. Democrats and Republicans are at loggerheads when it comes to agreeing the size, scale and direction of stimulus support and have earmarked Friday as a deadline for reaching a deal. If a compromise cannot be found talks will likely be abandoned for now, posing a real risk of deepening economic pressure across the US.

The Euro and GBP both advanced through trade on Wednesday, largely on the back of USD weakness. The single currency moved back above 1.1850 to test a break above 1.19 while GBP jumped through 1.31 to touch intraday highs at 1.3160. Attentions remain affixed to US lawmakers and ongoing fiscal stimulus updates as the primary driver of short-term direction.

Expected Ranges

NZD/USD: 0.6580- 0.6720 ▲

NZD/EUR: 0.5530 - 0.5630 ▼

GBP/NZD: 1.9480 - 1.9820 ▲

NZD/AUD: 0.9190 - 0.9330 ▼

NZD/CAD: 0.8780 - 0.8850 ▼