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Kiwi slides back below 0.66 after US FOMC Minutes

NZD - New Zealand Dollar

The New Zealand Dollar touched a one-week high intraday on Wednesday of 0.6651 against the U.S Dollar as risk sentiment remained firm across investors. Unfortunately the move was short-lived and NZD/USD lost ground late in the North-American session touching as low as 0.6554 as Gold prices dropped 3% following the release of the US Federal Reserve minutes. In the July monetary policy meeting the Fed said they saw little benefits from a yield curve control program, whilst at the same time shed little light on any new initiatives from the central bank.

Locally we saw Statistics of New Zealand release Q2 PPI numbers for both Input and Output. The input PPI fell 1.0%, while the output PPI declined 0.3%. Despite the weak numbers the NZD/USD still managed to rise intraday. There are no scheduled releases today and from a technical perspective, the Kiwi is currently trading at 0.6590, we can expect to see 0.6520 as near-term support followed by 0.6500. On the upside, expect to see resistance on moves approaching 0.6620 and 0.6680.

Key Movers

The US Dollar was the best performer overnight, bouncing back 0.8% on the US Dollar Index after a number of days in the red. The catalyst for the shift in direction came from the release of the FOMC July Meeting Minutes which had a few surprising takeaways. In the first instance, there appears to be a consensus forming for further forward guidance. The minutes note, “…providing greater clarity regarding the likely path of the target range for the federal funds rate would be appropriate at some point.” Secondly, and maybe more importantly, the Fed mentions that there is little consensus to adopt a yield curve control program and writes, “…participants judged that yield caps and targets were no warranted in the current environment but should remain an option that the Committee could reassess in the future if circumstances changed”. Overall, the perceived small shift towards a more normalized monetary policy led to broad based US Dollar demand which saw the Greenback claw back some of its more recent losses.

In other key movers, the Euro and Great British Pound also saw some movement with both being on the receiving end of some profit-taking. The Sterling fell around 1% to open this morning at 1.3109 and the Euro moved back down to 1.850.

Expected Ranges

NZD/AUD: 0.9172 - 0.9184 ▼

NZD/CAD: 0.8609 - 0.8712 ▼

NZD/EUR: 0.5478 - 0.5585 ▼

GBP/NZD: 1.9894 - 2.009 ▲

NZD/USD: 0.6506 - 0.6612 ▼