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Kiwi rises on Friday as risk sentiment shifts

NZD - New Zealand Dollar

Risk sentiment seemed to shift late in the Friday session as global equity markets and bond yields both rose heading into the weekend. This saw risk sensitive currencies outperform, allowing the NZD to rise from 0.6970 to trade above 0.7000. The AUD also rose from 0.7610 to 0.7644 which saw the AUD/NZD cross range between 1.0890 and 1.0930.

Without a clear catalyst for the price shifts, market expectations of a strong global recovery this year were buoyed by the impressive vaccination progress in the United States and news that President Biden is targeting 200 million vaccinated Americans within his first 100 days of office.

Although we have a busy week on the data front, today’s calendar is relatively light. Out of New Zealand, we have the February employment indicator which is expected to remain slow due to the lack of tourists over the normally busy summer months. Later we will see some second-tier mortgage data out of the UK which is not expected to be market moving before the session is rounded out by the Dallas Fed Index for March and some Fed Speak from FOMC’s Waller on the topic of Fed independence.

Looking at NZD/USD from a technical perspective, first lines of downside support can be seen between 0.6940 and 0.6950. A break below this level will test the psychological barrier at 0.6900 will take us back to December lows. Without any key resistance levels on the top side before 0.7180, investors will want to see the kiwi sustain levels above 0.7000.

Key Movers

As we touched on above, ‘risk on’ returned to markets late on Friday after a weak of sour market sentiment. Global equity and rates markets rallied, taking risk sensitive currencies such as the AUD and NZD with them. The S&P500 rose 1.7% to make fresh highs, led by the energy and materials sectors.

In currencies, the USD was broadly weaker in line with the ‘risk on’ mood with the commodity linked Norwegian Kroner the best performer on the day. In Europe, the Euro closed up 0.3% to trade close to 1.18 against the greenback whilst the safe haven JPY underperformed, falling 0.4% to trade nearer to the key 1.10 level.

Expected Ranges

NZD/USD: 0.6940 - 0.7180 ▲

NZD/EUR: 0.5880 - 0.6000 ▲

GBP/NZD: 1.9590 – 1.9800 ▲

AUD/NZD: 1.0850 - 1.0950 ▲

NZD/CAD: 0.8750 - 0.8850 ▲