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New Zealand Dollar succumbs to a stronger Greenback

NZD - New Zealand Dollar

The New Zealand Dollar much like its Australian counterpart, gained earlier in the week taking the pair towards 13-months highs of 0.6789 against the USD on the back of the Federal Reserve adopting a new policy that will keep interest rates low for a long time. At the same time the RBNZ appeared unconcerned about the high NZD this week and does not believe it is overvalued. However, the NZD/USD pair succumbed to the USD show of strength on Friday following better-than-expected jobs numbers out of the US painting a picture of improvement and continued recovery in the US economy creating demand for the Greenback and pushing the NZD/USD to weekly lows of 0.6667 early in the North-American session.

Opening this morning at 0.6717, we can expect to see near-term support levels around 0.6640. On the upside, resistance is sitting at 0.6770. Looking ahead, the local calendar is light until Wednesday where we will see the release of Manufacturing Sales and ANZ Business Confidence followed by Friday’s Business NZ Manufacturing Index.

Key Movers

The USD Index which measures the strength of the Greenback against a basket of six major currencies was up 0.5% on Friday helped by a positive U.S jobs report for August. Data showed non-farm payrolls increased by 1.371 million jobs in August and the unemployment rate fell to 8.4% from 10.2% in July. Meanwhile, Gold fell a fourth straight day in a row on Friday, losing 2% on the week from an unexpected surge in the Greenback.

In Europe, Germany saw the release of Factory Orders which rose 2.8% in July, the numbers were below estimates however noting it was a third rise in a row. EUR/USD hit 1.2000 earlier in the week for the first time since 2018 and has been boosted mostly by a broadly weaker Greenback and improved sentiment towards the European Union’s 750 billion-euro pandemic rescue fund. Inflation in the eurozone also turned negative in August for the first since 2016. Markets will be anticipating this Thursdays ECB policy meeting as officials will have plenty to talk about.

Expected Ranges

NZD/USD: 0.6640 - 0.6770 ▲

NZD/EUR: 0.5620 - 0.5720 ▲

GBP/NZD: 1.9650 - 1.9850 ▲

NZD/AUD: 0.9170 - 0.9260 ▼

NZD/CAD: 0.8740 - 0.8850 ▲