Home » Daily Commentaries » Kiwi slips back below 0.70 despite data supporting a rate hike next week

Kiwi slips back below 0.70 despite data supporting a rate hike next week

Friday 13 August, 2021

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar has fallen back below 0.70 US cents, underperforming through trade on Thursday amid a broad decline in demand for risk. The ebb and flow of market sentiment has confined the NZD to a narrow trading handle these last 2 weeks and made it difficult for the currency to extend back beyond 0.7050/0.71. Having opened the day buying 0.7045 the NZD fell steadily through the domestic session despite a host of second-tier domestic data sets that support a shift in RBNZ monetary policy and all but guarantee a rate hike next week. Dipping below 0.70 through the overnight session the NZD found some support on moves approaching 0.6995 and currently buys 0.70 US cents. With little data on hand to drive direction today we anticipate the NZD will remain largely range-bound in the lead up to next weeks RBNZ and MPC policy announcement.

Key Movers

A lacklustre overnight session meant very little price action across major currencies as markets appeared content to sideline big bets in lieu of any headline data events. The USD index edged marginally higher, while the euro and Japanese yen tracked sideways on the day. The Great British pound gave up half a percent testing a break back below 1.38 despite a robust Q2 GDP data print. The UK economy grew 4.8% quarter-on-quarter with the annualised pace of growth nearing 20%. The stirring recovery in growth did little to drive market activity with investors instead seeing the uptick as a reminder of just how big the pandemic downturn was. With the UK again grappling with a new wave of COVID-19 infections as the Delta variant rips across the country there is concern the economic re-opening will not be maintained, especially as we move beyond the northern hemisphere summer and into the colder months. Our attentions today remain affixed to the global risk narrative with pandemic lead headwinds controlling market direction.

Expected Ranges

  • NZD/USD: 0.6950 - 0.7090 ▼
  • NZD/EUR: 0.5920 - 0.6020 ▼
  • GBP/NZD: 1.9650 - 1.9820 ▲
  • NZD/AUD: 0.9490 - 0.9570 ▼
  • NZD/CAD: 0.8720 - 0.8820 ▼