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NZD forced back below 0.70 US cents

Thursday 1 July, 2021

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar underperformed through trade on Wednesday slipping back below 0.70US cents amid stronger than expected US macroeconomic data and a broadly stronger USD. Leading employment data in the US outperformed estimates, helping consolidate expectations Friday’s labour market report will present a strong showing. With markets intent on ignoring fundamentals and instead fixating on US monetary policy and near-term headwinds, the NZD touched intraday lows at 0.6965 before creeping higher into the daily close. With commodity prices enjoying sustained support, particularly NZ exports, we expect the NZD will regain its ascendancy moving through Q3 yet acknowledge the delta variant and near-term headwinds pose a risk to this outlook. A break below the mid-June low at 0.6927 could prompt a broader sell-off toward September 2020 levels and 0.6730.

Key Movers

Month end flows and broadly stronger demand for the world’s base currency helped the USD track higher through trade on Wednesday. ADP private payroll data outperformed market expectations and while not always a reliable leading indicator of labour market performance was enough to fuel expectations Friday’s non-farm payroll report will present a strong showing and surpass consensus expectations. With other US data sets mixed, investors appeared content in sidelining bigger bets until Friday. Markets are fixated on US monetary policy and while the impact of commentary from Fed policymakers has dissipated through the last 7 days, labour market performance and the speed at which the US economy replaces those jobs lost to the pandemic is critical in shaping policy moving forward. The Japanese yen was one of the worst performers overnight as investors appeared to adjust positions come month-end and correct some of the gains enjoyed through June. The yen fell sharply allowing the USD to push through 111 and touch a 15-month high. The euro and GBP continue to soften with the euro slipping toward 1.1850 and the GBP struggling to hold onto 1.38.

Expected Ranges

  • NZD/USD: 0.6930 - 0.7050 ▼
  • NZD/EUR: 0.5860 - 0.5935 ▲
  • GBP/NZD: 1.9605 - 1.9950 ▲
  • NZD/AUD: 0.9290 - 0.9350 ▲
  • NZD/CAD: 0.8610 - 0.8720 ▼