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NZD closes in on break above 0.67

NZD - New Zealand Dollar

The New Zealand Dollar sits atop its major counterparts, having outperformed through trade on Thursday. A bump in equities throughout the US session and sustained US dollar softness helped the NZD mark fresh weekly highs at 0.6690 and test a break above 0.67. The dollar has struggle to extend beyond resistance at 0.67 with short-term direction heavily dependent on the outcome of Fiscal stimulus talks in the US. Negotiations have stalled with significant difference preventing a deal being reached. With lawmakers earmarking Friday as a deadline to strike an agreement it appears a compromise may remain elusive. With the White House committed to installing a stop gap measure if talks break down we should see some form of government relief leading into the weekly close. A break above resistance could prompt an extension in recent upside, while supports at 0.6580 remain intact for now.

Key Movers

The US dollar edged marginally lower Thursday despite improved labour market data. Jobless claims fell sharply, printing below 1.2million down from 1.435million, the largest weekly decline in almost 2 months. The improved read eases concerns the labour market recovery was beginning to stall amid increasing COVID-19 cases and new social distancing restrictions. As the pace of coronavirus spread begins to slow there is hope the recovery will enjoy a kickstart, but with numbers still 5-6 times larger than pre-pandemic levels any sustained USD recovery will be heavily reliant on Government relief plans.

The Great British pound rallied toward 1.32 on Thursday after the Bank of England proffered a neutral tone and was perhaps less pessimistic toward the ongoing economic outlook than investors anticipated. Monetary Policy Committee members voted unanimously to keep rates on hold at 0.1% and maintain the current pace of QE purchases. While markets expected the board would refrain from wholesale adjustments, many had priced in a push toward negative interests’ rates. BoE Governor Bailey acknowledged that a shift to negative rates were in their toolbox but “we don’t plan to use them at this moment”. The affirmation the bank will avoid negative rates coupled with a downward adjustment in unemployment forecasts and the GBP extended its push above 1.31, testing 1.3180 and closing in on a break back above 1.32.

Attentions into the weekend remain affixed to the ebb and flow of risk sentiment, while US stimulus talks dominate short-term direction.

Expected Ranges

NZD/USD: 0.6580 - 0.6760 ▲

NZD/EUR: 0.5530 - 0.5680 ▲

GBP/NZD: 1.9420 - 1.9850 ▼

NZD/AUD: 0.9190 - 0.9305 ▲

NZD/CAD: 0.8780 - 0.8920 ▲