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NZD/USD consolidates above 70c

NZD - New Zealand Dollar

Friday’s session saw the New Zealand Dollar rise from 0.7010 to test the 0.7040 handle as US equity markets continued their ascent. The risk on mood saw the USD fall across the board, allowing the New Zealand Dollar to benefit however with the AUD also rising strongly, the AUD/NZD rose 20 points from 1.0500 to 1.0520.

Looking to the day ahead, domestically we have ANZ business confidence data which is expected to remain constant around its pre-Covid average. Moving offshore, we have Australian company profits data for Q3 and the Melbourne Institute’s inflation. Some analysts are forecasting a 6% rise in Q3 company profits after we saw a 15% surge in Q2, largely resultant of the unprecedented fiscal support measures. We will also get Japanese industrial production numbers which are expected to be soft before the increasingly important Chinese manufacturing PMI data is released later in the session.

We expect the Chinese PMI data to set the tone for the New Zealand Dollar for the week ahead. A strong release or a continued rise in risk sentiment, could see the domestic unit test 0.7060 against the greenback.

Key Movers

Friday’s session was pretty quiet globally with not much in the form of news after the thanksgiving holiday in the US. As we touched on above, we did see the US Dollar index retreat 0.2% as equity markets rose. Interestingly, the positive risk sentiment didn’t extend into rates markets as bond yields also fell, suggesting some cautiousness in the market as Covid cases persisted.

EUR/USD was able to rise 0.4%, taking it closer to the key psychological level of 1.20. The GBP was the worst performer on the day, falling 0.5% to 1.3310. Without a clear catalyst, the sharp fall could be resultant of cautiousness from investors about Brexit negotiations as the year end deadline nears.

Expected Ranges

NZD/USD: 0.6950 - 0.7080 ▲

NZD/EUR: 0.5840 - 0.5920 ▲

GBP/NZD: 1.8800 – 1.9150 ▼

AUD/NZD: 1.0500 - 1.0600 ▲

USD/CAD: 0.9000 - 0.9200 ▲