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Kiwi unable to hold onto gains amid risk off mood

Friday 16 July, 2021

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar failed to hold onto Wednesday’s gains, giving up 0.70 US cents again amid a definitive risk off shift. A cautious mood permeated markets overnight prompting a sell off across equities and commodity currencies. There appears no obvious driver behind the move, instead uncertainty surrounding the delta variant, global growth outlook and potential changes in Fed monetary policy overwhelmed investors, pushing the NZD toward intraday lows at 0.6970. Our attentions turn now to today’s domestic CPI report. We expect an increase in both quarterly and annual headline CPI, with the latter printing near the top end of the RBNZ 1%-3% target range. A surprise to the upside could see markets rush to price in an August rate hike and help spur the Kiwi back through 0.70 cents and test 0.7050.

Key Movers

The US dollar enjoyed broad based gains through trade on Thursday, buoyed as markets adopted a risk off tone. The dollar index advanced three tenths of a percent, while other safe haven currencies enjoyed upside support, particularly the Japanese yen. Commodity currencies were the days big losers with the NOK and CAD leading losses, giving up 1% and 0.9% respectively. Markets continue to lack conviction meaning fluctuations in risk appetite are driving volatility within well defined ranges. Uncertainty across financial markets is unlikely to abate in the near term and we expect the push and pull between risk and haven assets will continue until a definitive path to recovery is available.

Expected Ranges

  • NZD/USD: 0.6920 - 0.7050 ▼
  • NZD/EUR: 0.5880 - 0.5950 ▼
  • GBP/NZD: 1.9650 - 0.9950 ▲
  • NZD/AUD: 0.9350 - 0.9420 ▲
  • NZD/CAD: 0.8750 - 0.8820 ▼