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NZD maintains shift above 0.70 as market focus turns to US payroll data

Friday 6 August, 2021

Daily Currency Update

NZD - New Zealand DollarThe NZD tracked marginally higher through trade on Thursday, bouncing off 0.7040 to mark intraday highs at 0.7075. Improved market demand for risk helped the kiwi sustain the upside enjoyed in the wake of this week’s upbeat labour market print and RBNZ commentary, consolidating a break back above 0.70 US cents. That said, overnight gains were relatively well contained as markets shift their attentions to Friday’s all important US non-farm payroll print. We anticipate a high level of sensitivity surrounding tonight’s data release. The Fed has intimated the timing of any decision to taper bond purchases and the current QE program is directly linked to labour market performance. Leading indicators suggest we may see a decline in labour market performance, perhaps opening the door for the NZD to stretch back beyond 0.71 US cents. That said, preliminary data has not been as reliable over recent months and there is certainly scope to suggest the US economy will continue to build on the recovery to date. A print above 870K will likely send the kiwi back below 0.70 cents.

Key Movers

The US dollar drifted lower overnight as the CAD, AUD and NZD all outperformed amid a modest uptick in demand for risk assets. There appears little reason for the appreciation in risk demand and admittedly ranges have been well contained as markets shift their focus to tonight's US payroll print. The Great British pound extended back beyond 1.39, testing 1.3950 after the Bank of England policy meeting. While policy makers elected to maintain the current policy setting, they suggested that modest rate hikes might be needed as early as next year, adding that it intended to stop reinvesting maturing bonds in a bid to reduce the QE balance sheet, winding back stimulus measures. The surprisingly open assessment of future monetary policy plans surprised markets and helped fuel demand for sterling. With little price action across other major pairs, our attentions turn now to tonight’s non-farm payroll data. With fed policy directly linked to labour market performance we expect a high degree of sensitivity and price action following the data drop.

Expected Ranges

  • NZD/USD: 0.6970 - 0.7120 ▲
  • NZD/EUR: 0.5920 - 0.6010 ▲
  • GBP/NZD: 1.9620 - 1.9820 ▲
  • NZD/AUD: 0.9480 - 0.9550 ▼
  • NZD/CAD: 0.8790 - 0.8870 ▼