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Kiwi trades lower on dampened risk sentiment

NZD - New Zealand Dollar

The Kiwi fell back below 0.7200 on Friday as global risk sentiment soured as the United states heads into a long weekend. The Kiwi followed the S&P500 lower through trade, retreating from 0.7205 to 0.7120. Although the Australian dollar also fell, the AUD/NZD cross pushed to three-month highs above 1.0800, continuing its six week rally.

Looks like a quiet session ahead today with the USA observing Martin Luther King Day. The only release of note will be Q4 GDP data out of China with analysts expecting a 2.7% rise. We will also see Chinese industrial production and retail sales data which will be closely watched as indicators of both business and consumer spending.

With the pair currently settled around 0.7150 heading into today’s session, the recent weakness has pushed the previous weekly high of 0.7315 out of reach. 0.7120 will act as our first line of downside support with solid support seen around the 50-day moving average of 0.7049.

Key Movers

Risk aversion is the main narrative in markets this morning as the US observes the Martin Luther King Day public holiday. Friday’s dollar strength was a biproduct of the dismal mood in markets following weaker than expected retail sales and employment data. Concerns of delays in vaccine distributions only compounded the mood further.

EUR/USD fell below 1.2100 through trade with commodity linked currencies like the Australian Dollar and New Zealand Dollar the hardest hit. The pound managed to settle below 1.3600 with Prime minister Boris Johnson announcing further travel restrictions as they try to deal with potential new strains of COVID 19.

In commodities, the resurgent USD saw gold fall sharply. Oil also fell, WTI closed on Friday changing hands at USD $50 per barrel.

Expected Ranges

NZD/USD: 0.7118 - 0.7200 ▼

NZD/EUR: 0.5850 - 0.5945 ▼

GBP/NZD: 1.8890 – 1.9100 ▲

AUD/NZD: 1.0730 - 1.0850 ▲

NZD/CAD: 0.9000 - 0.9120 ▼