Daily Currency Update

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NZD range bound as markets grapple with short term headwinds.

NZD - New Zealand Dollar

The New Zealand dollar was flat through trade on Monday, maintaining a narrow 40-point range as price action across major currency was largely muted. Equities consolidated recent gains, trending lower having touch record highs while a lack of conviction across currency markets meant a largely quiet start to the new week. Investors appear reluctant to extend positions amid COVID19 vaccine concerns and a shifting timeline to recovery. Reports China’s Sinovac vaccine carries only a 50% efficacy rate have dampened hopes it will assist in drastically reducing COVID-19 case numbers; while the concerns linked with AstraZeneca and rare clotting side effects have only served to force analysts to push back the timeline of economic recovery and re-opening. Vaccine schedules globally remain largely behind schedule adding short term headwind to commodity currencies and risk assets.

With little of note on today’s macroeconomic ticket our attentions turn to Wednesday’s US CPI inflation report and Thursday’s RBNZ policy announcement and rate statement as key marker’s for direction.

Key Movers

Moves across majors were subdued through trade on Monday with commodity currencies flat and the Pound and Yen enjoying only modest upside. With little of note on the day’s macroeconomic ticket the dollar index edged marginally lower as the GBP crept back above 1.3750, the Euro touched highs at 1.1920 and the Yen forced a shift back toward 109.20. Investors appear reluctant to extend positions in the face of short-term uncertainty, creating an absence of conviction across currency markets. While analysts have largely priced in rate variances and long run optimism, short term headwinds created by delays to the global vaccine rollout and ongoing COVID-19 outbreaks have extended the timeline of expectation for a global economic recovery.

With little of note on today’s data ticket we turn to Wednesday’s CPI print and Thursday’s US retail sales report for direction and guidance through the week ahead.

Expected Ranges

NZD/USD: 0.6980 - 0.7080 ▲

NZD/EUR: 0.5850 - 0.5930 ▼

GBP/NZD: 1.9380 - 1.9620 ▲

NZD/AUD: 0.9180 - 0.9250 ▼

NZD/CAD: 0.8790 - 0.8870 ▲