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Sleepy start to the week sees NZD range bound through Monday

Tuesday 31 August, 2021

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar offered little to spark excitement through trade on Monday in what was a largely uneventful start to the week. Having extended back above 0.70 US cents leading into the close on Friday the NZD failed to hold onto gains, giving up intraday highs at 0.7015 to mark overnight lows at 0.6987. With little of note on the macroeconomic calendar to drive direction it appears investors were content to square positions and absorb some gains following last weeks risk on rebound. Having largely controlled the latest COVID outbreak our expectations for an RBNZ rate hike come October remain intact and should see the NZD trade within a familiar range between 0.6950 and 0.71/0.7130 through the near term, with opportunities for upside against key crosses. The NZD is poised to breach 0.96 against its antipodean counterpart with a break above this threshold opening the door for an extension toward 0.97 and 0.98. Our attentions today remain affixed to the broader risk narrative and with little headline newsflow or data due we expect price action will be relatively well contained.

Key Movers

Price action across currency markets was largely muted through trade on Monday with majors tracking within two tenths of a percent through much of the day. The Dollar index edged ever so slightly higher as investors appeared content to square positions and recoup profits following last weeks risk on recovery. With little headline newsflow or macroeconomic data on hand to drive direction it really was a sleepy start to the trading week. A lack of conviction across currency markets has been evident of late with investors reluctant to extend moves in either direction. Our attentions now turn to Chinese PMI data for insights into the impact of the latest pandemic restrictions while US non-farm payroll and PMI data dominate the docket leading into the end of the week. With Fed President Jerome Powell highlighting the importance of a labour market recovery in guiding FOMC policy decisions we are keenly attuned to any deviation from expectation as a possible catalyst to spark direction.

Expected Ranges

  • NZD/USD: 0.6950 - 0.7130 ▼
  • NZD/EUR: 0.5890 - 0.6010 ▼
  • GBP/NZD: 1.9580 - 1.9820 ▲
  • NZD/AUD: 0.9550 - 0.9630 ▲
  • NZD/CAD: 0.8750 - 0.8850 ▼