Daily Currency Update

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NZD/USD posts 10th consecutive week of gains

NZD - New Zealand Dollar

The New Zealand Dollar finished down about 0.2% on Friday and continues to trade within the 0.7220-0.7280 range. Having initially looking likely to test the 0.7300 handle, it fell to intraday lows of 0.7205 as the US Dollar rebounded across the board on renewed hopes of increased fiscal stimulus.

Looking to the day ahead, we have nothing on the domestic docket however retail sales from across the pond will be closely watched. Attention will then shift further offshore as we are set to see Chinese CPI data for December. Given China’s increasing importance for the New Zealand and global economy, look for this release to set the tone for the rest of the week.

Last weeks high of 0.7315 will be a level of interest to traders this week if we get off to a positive start. Although technical indicators point to an overbought New Zealand Dollar, the path to levels above 0.7300 is a clear one. First lines of downside support are seen around 0.7200 with moves below this level expected to meet bids at the 0.7150 handle.

Key Movers

The main narrative in financial markets on Friday was an advancing greenback. Against a backdrop of selling pressures throughout the week, the US Dollar rose across the board despite a disappointing Nonfarm Payroll report. The thinking here is that the higher than expected job loss count will lead to more fiscal stimulus in the hope of boosting employment. Confirming this, President-elect Biden immediately called for an increase in the direct payments of $2000 and further fiscal support.

The greenback strength saw the Euro underperform as EUR/USD neared 1.220 during trade. USD/JPY settled at a three-week high around 104.00 with traders now eyeing the key 104.50 level.

Expected Ranges

NZD/USD: 0.7190 - 0.7315 ▲

NZD/EUR: 0.5850 - 0.5970 ▲

GBP/NZD: 1.8660 – 1.8900 ▲

AUD/NZD: 1.0680 - 1.0750 ▲

NZD/CAD: 0.9090 - 0.9230 ▼