Daily Currency Update

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Sustained break above 0.71 remains elusive

NZD - New Zealand Dollar

The New Zealand dollar maintained a narrow handle through trade on Tuesday, fluctuating between 0.7060 and 0.7100 US cents. Broader optimism driven by renewed vaccine hopes, the promise of US fiscal stimulus and reports of a Brexit deal is still on the table helped the NZD test highs near the top of recent ranges. With the USD on the back foot again the NZD looks set to maintain the current upturn; however, having given up gains above 0.71 earlier this week a sustained break above this handle remains elusive. Yesterday's fortnightly dairy prices auction showed continued strength across milk prices, underpinning signs the country and key trading partners are rebounding much faster than other major counterparts.

With little of note on today’s docket we expect little change in the broader market narrative with resistance on moves above 0.71/0.7120 in play and support above 0.6980/0.70 intact.

Key Movers

The US dollar struggled to make any meaningful headway through trade on Tuesday, continuing to languish near two-year lows amid sustained market optimism a 2021 recovery will be driven by widespread immunisation and fiscal support. The dollar index touched 90.57, only marginally above Monday’s low at 90.419.

The Euro failed to extend significantly beyond 1.2150 marking highs at 1.2165, while the GBP led majors higher, advancing three quarters of 1 percent amid new hopes an 11th hour Brexit deal will be struck. Reports from the BBC a deal was imminent saw Sterling surge back through 1.34. Having touched intraday day highs at 1.3450 investors appeared reluctant to drive further gains ahead of an official announcement. An end to political posturing and final Brexit agreement will drive GBP gains across the board, potentially forcing the AUD back below 0.55 pence. Our attentions remain squarely affixed to official reports as we move through the last week before the Christmas and New Year holidays.

Expected Ranges

NZD/USD: 0.6990 - 0.7120 ▲

NZD/EUR: 0.5790 - 0.5870 ▲

GBP/NZD: 1.8780 - 1.9220 ▲

NZD/AUD: 0.9330 - 0.9450 ▲

NZD/CAD: 0.8950 - 0.9050 ▼