Daily Currency Update

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Kiwi maintains narrow trading band amid fluctuation in risk demand

NZD - New Zealand Dollar

The NZD offered little to excite investors through trade on Wednesday, again maintaining a narrow trading band and bouncing between support and resistance at 0.6645 and 0.6680. The NZD failed to take advantage of a broader USD correction as the world’s base currency gave up Tuesday’s gains amid a downturn in key domestic data sets and amended Stimulus expectations. The NZD remains vulnerable to changes in the broader risk narrative and ongoing expectations for monetary policy loosening. Having struggled to extend beyond 0.68 in early September we expect recent ranges will be maintained as investors respond to fluctuations in sentiment and headline data events. With Europe’s case numbers again on the rise and further lockdown’s likely to derail the global economic recovery it will be difficult for the growth dependent NZD to extend beyond the current bounds in the absence of a reversal in case numbers or a vaccine. With little of note on today’s domestic docket we again expect the dollar will trade within a narrow range bouncing between 0.6550 and 0.6710.

Key Movers

The USD gave up gains enjoyed through Tuesday, slipping off three-week highs amid shifting US fiscal stimulus expectations. The dollar is very much range bound at present, driven by fluctuations in the broader risk narrative, fueled by expectations for stimulus and a COVID-19 vaccine. It is becoming increasingly unlikely a fiscal support package will be made available ahead of the November 3 election, leaving significant funding gaps in key support programs across the US, leaving millions of Americans struggling under the weight of the COVID-19 virus. With consumer confidence evaporating, the engine room of the US economy is fast running out of steam and the longer congress delays a rescue package the deeper the recession.

The Great British Pound edged back above 1.30 through trade on Wednesday following comments from key British officials suggested progress had been made. Having touched lows at 1.2865 on fading hopes of a trade deal prior to the comments Sterling then surged through 1.30 to touch intraday highs at 1.3050. The pounds fortunes are squarely affixed to the Brexit outcome this week with the impacts of the resurgent coronavirus taking a back seat. We expect the currency will continue to fluctuate in response to headline updates as talks progress. If differences can be set aside and an 11th hour deal brokered then an extended run beyond 1.30 is more than likely.

Expected Ranges

NZD/USD: 0.6550 - 0.6680 ▲

NZD/EUR: 0.5580 - 0.5690 ▲

GBP/NZD: 1.9280 - 1.9880 ▲

NZD/AUD: 0.9210 - 0.9330 ▲

NZD/CAD: 0.8710 - 0.8790 ▲