NZD - New Zealand Dollar
The New Zealand dollar underperformed through trade on Monday, falling almost half a percent amid broader US dollar gains and thin trading volumes. With little on hand to drive direction markets forced the NZD lower, continuing last weeks risk off tone amid ongoing softness across equities. The NZD slipped below 0.67, marking intraday lows at 0.6690 before supports kicked in and the sell off stalled.
Despite the recent correction the NZD continues to mark higher lows and higher highs against the US dollar as the Fed’s aggressive and uber loose monetary policy program more than offsets the RBNZ own QE push. However, with negative interest rates all but locked in come Q1 2021 ongoing gains will likely be driven by sustained US dollar weakness than any inherent NZD strength. With resistance intact on moves approaching 0.68 we expect the NZD will maintain a relatively muted trading band through much of this week, struggling to extend gains ahead of next weeks GDP print and FOMC policy meeting.
The Great British Pound was the days big mover, correcting lower following heightened concern a Brexit trade agreement will not be reached. Reports emerged overnight that Britain is planning to enact new legislation that will seek to override key components of the Withdrawal Agreement, a move that could undermine negotiations to date and derail hopes for a clean break. Doubling down Boris Johnson suggested that if a deal could not be reached by mid-October then it is unlikely a trade deal will be agreed, imploring all side should simply move on and work on contingency plans. Sterling lost almost 1% through the day, tumbling below 1.3250 and 1.32 to touch intraday lows at 1.3140. With uncertainty around Brexit growing and the likelihood of a no deal divorce increasing we expect increased volatility moving into the latter half of Q3 and into Q4.
The US dollar advanced against a basket of major currencies amid thin volumes and a lack of direction through labour day Monday. With most investors offline markets remained wary of extending recent moves, led by last weeks rout on equities, instead holding fire until business resumes as normal on Tuesday. The US dollar having bounced of 28-month lows appears to have found some support as markets stop to take stock of recent moves ahead of further anticipated weakness leading into the end of the year. With little of note on today’s macroeconomic docket attentions turn to Thursday ECB policy meeting and Fridays Core CPI inflation print as key markers for direction into the weekly close.
0.6650 - 0.6760 ▼
0.5620 - 0.5690 ▼
1.9520 - 1.9880 ▼
0.9120 - 0.9250 ▼
0.8720 - 0.8810 ▼