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New Zealand Dollar peaks at 73 US cents

NZD - New Zealand Dollar

The New Zealand Dollar extended its rally on Friday evening reaching a near three year high of 0.7315 and rising 1% on the day. Opening just above the 72 US cent handle there was little movement during the domestic session despite the Producer Price Index rising by 0.4% for the December quarter of 2020.

All the action happened for the Kiwi in offshore trading as risk appetite continues to be positive for commodity-based currencies. NZD/USD closed at 0.7292 to end the week in higher fashion. The local economy hopes to be bolstered by the removal of level 3 lockdowns last week to Auckland as local businesses continue to be affected by its third lockdown in a year.

All eyes will be on the RBNZ this week due to meet on Wednesday afternoon along with the rollout of the COVID-19 vaccine. The New Zealand Dollar opens this morning at 0.7290. We expect support levels to hold on moves approaching 0.7260, while any upward push will likely meet resistance at 0.7360.

Key Movers

The US Dollar Index declined 0.25% on Friday evening to 90.36 as riskier assets were in favour this week. The announcement of newly elected president Joe Biden's proposed $1.9 trillion coronavirus relief package spurred on hopes that there will be an improvement in the world’s largest economy in 2021.

Coronavirus numbers on the 7-day average continued to see lower lows as vaccines are rolled out globally. G7 leaders met virtually on the weekend releasing a statement pledging the need to distribute vaccines into developing countries. Both British Prime Minister Boris Johnson announced the donation of UK’s surplus and US President Joe Biden a $4bn commitment to the global COVAX alliance.

On the data front it was dismal retail sales figure in the United Kingdom as the UK’s third lockdown saw retail sales fall more than 8% for the month of January. Despite the poor figures, Sterling closed nearly at record highs and a touch under the 1.40 handle against the US Dollar. EUR/USD also edged higher (0.2%) following a mixed release of manufacturing and services PMI release in Europe.

This week all eyes will be on UK PM Boris Johnson who expects to provide further updates on UK lockdown restrictions. Federal Reserve Chair Jerome Powell is also due to testify before the senate banking committee for the first time this year in Washington DC. While House Democrats are planning to vote in regard to President Biden's COVID relief bill this week.

Expected Ranges

NZD/USD: 0.7260 - 0.7360 ▲

NZD/AUD: 0.9200 - 0.9300 ▼

GBP/NZD: 1.9000 - 1.9350 ▼

NZD/EUR: 0.5970 - 0.6050 ▲

NZD/CAD: 0.9170 - 0.9230 ▲