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Positive sentiment advances Kiwi higher

NZD - New Zealand Dollar

The New Zealand Dollar continued its upbeat mood on Tuesday opening at the 67 US cent handle. Initial drops were seen early on to intraday lows of 0.6687 following a fall in consumer confidence in the latest Westpac McDermott Miller Consumer Confidence Index. Despite the reduction, Westpac noted that the impact of Covid-19 at this point in time looks to have taken its biggest hit in the previous months.

A positive release of Chinese data during the Asian session fuelled an uptick for the local currency to intraday highs of 0.6737 during the afternoon trade as Retail Sales (+0.5%) and Industrial Production (+5.6% y/y) both exceeded expectations for the August print.

Overnight the GDT Price index increased by 3.6% in the latest auction bucking four consecutive losses. Skim and whole milk powders both performed well, supporting the NZD/USD cross above 0.67 overnight.

The New Zealand dollar opens this morning at 0.6710 ahead of the latest New Zealand Current Account figures. We expect support levels to hold on moves approaching 0.6680, while any upward push will likely meet resistance at 0.6750.

Key Movers

The USD retreated overnight against the majority of G-10 currencies as investors position themselves ahead of this evening's Federal Reserve interest rate decision. USD/JPY tested two-week lows and the US Dollar Index retreated to 95.80 overnight. There are no expectations of any change in interest rates by the Fed although markets are expecting a potential update on the dot plot for 2023.

Equities were higher fuelled by a rebound in tech stocks, the Nasdaq up 1.2% and the S&P up 0.5% on the day. Oil was also trending higher as the WTI rose 2.25%. Hurricane season arrives in the United States disrupting supply to the market.

The Great British Pound looks to have potentially set a floor this week recovering from two-month lows against the US Dollar. Prime Minister Boris Johnson’s proposed law to override parts of the Brexit agreement with the EU passed through the commons overnight. Up from 1.2790 on open this week to 1.2890 overnight, continued Brexit negotiations looks to be a key driver for the Sterling again after seeing a 6% drop from the start of September.

Expected Ranges

NZD/USD: 0.6680 - 0.6750 ▲

NZD/AUD: 0.9150 - 0.9220 ▼

GBP/NZD: 1.9000 - 1.9350 ▼

NZD/EUR: 0.5620 - 0.5700 ▲

NZD/CAD: 0.8810 - 0.8900 ▲