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Kiwi tracks sideways amid cautious rebound in risk

NZD - New Zealand Dollar

The New Zealand dollar tracked sideways Monday, bouncing between support and resistance and offering little to excite investors. Having suffered a sharp correction through last week the kiwi’s downward march stalled as improved demand for risk and a rebound across equities underpinned supports. Having touched intraday lows at 0.6540 the NZD crept back above 0.6550 to touch 0.6567 before edging lower into this morning’s open.

With little of note on this week’s domestic macroeconomic docket attentions turn to the first US presidential debate and host of key US data sets crucial in assessing the health of the worlds largest economy and the direction of the Presidential race into November. With US shorts at a near 9 year high there is ample room for a sustained US dollar advance. A sustained risk off run and further souring of market sentiment could see the NZD forced back toward 0.64 in the weeks ahead.

Key Movers

Safe Haven currencies underperformed through trade on Monday as improved demand for risk helped equities buck the four week downturn, finding upward momentum amid hopes talks between democrats and the White House may still lead to renewed programs of fiscal support ahead of the election. The USD and JPY both fell with the dollar giving up near two month highs, down three tenths of a percent on the day.

The Euro edged upward yet still struggles to regain the upward momentum that saw it test 1.20, trading between 1.1620 and 1.1680.

Sterling found support Monday, outperforming major counterparts amid hopes resumed Brexit negotiations will lead to at least some form of exit plan that avoids the UK falling off the proverbial economic cliff. Talks resumed Monday and while officials warned a deal was some way off optimism across markets as comments from EU official suggested the mood was improved and compromises on key sticking points, particularly fisheries, could be agreed in time to secure a plan ahead of the October 15 deadline. Breaking through 1.29 to touch 1.2925 attentions remain squarely affixed to headlines as they emerge. Any sign a deal will be brokered will be Sterling positive and likely drive a run back toward and through the psychological 1.30 barrier.

Expected Ranges

NZD/USD: 0.6480 - 0.6620 ▼

NZD/EUR: 0.5590 - 0.5650 ▼

GBP/NZD: 1.9280 - 1.9730 ▲

NZD/AUD: 0.9210 - 0.9320 ▼

NZD/CAD: 0.8710 - 0.8790 ▼