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Kiwi outperforms as RBNZ stays put and risk appetite improves

NZD - New Zealand Dollar

The New Zealand dollar outperformed through trade on Wednesday extending back through 0.71 US cents. Improved risk appetite helped drag risk assets higher, pushing both US and European equities to near record highs while dragging commodity currencies higher. The RBNZ monetary policy review and rate statement offered little beyond the message proffered in February, simply affirming the bank's commitment to accommodative monetary policy, hardly a trigger to spur the evenings uptrend. Instead, it appears technical supports have encouraged the advance. Improved risk appetite and a broadly cheap NZD have culminated in a push toward intraday high at 0.7150.

With the week's key risk event behind us and little of note on today’s domestic ticket, our attentions turn to US retail sales for macroeconomic direction. A positive print and a sustained risk-on run could help the NZD extend the recovery toward and beyond 0.72 US cents.

Key Movers

The USD underperformed through trade on Wednesday leading traditional safe-haven currencies lower amid increased appetite for risk. Having broken below 92 earlier this week, the dollar index extended losses below this key support handle marking intraday lows at 91.59 before edging higher into the Australasian open. With little data or news on hand to drive direction, technical factors appear responsible for the shift in direction this week, perhaps driven by expectations for extended accommodative monetary policy. Reports Denmark has suspended use of AstraZeneca’s COVID-19 vaccine when coupled with data suggesting Johnson and Johnson's viral vector vaccine faces similar clotting concerns and the Sinovac vaccine efficacy rate is barely above 50% and investors have been forced to extend the timeline of expectations surrounding a full-scale economic and global recovery and with that the period of accommodative monetary policy. With central banks globally adamant they will not remove current stimulus measures until a sustained recovery is evident, an extension in that timeline has helped spur gains across Wall Street and European equities dragging risk assets higher.

Attentions today turn to US retails sales for macroeconomic direction.

Expected Ranges

NZD/USD: 0.7020 - 0.7220 ▲

NZD/EUR: 0.5880 - 0.6020 ▲

GBP/NZD: 1.9130 - 1.9520 ▼

NZD/AUD: 0.9180 - 0.9260 ▲

NZD/CAD: 0.8830 - 0.8990 ▲