Daily Currency Update

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Currency markets unmoved despite rising equities and volatility in bond yields

NZD - New Zealand Dollar

The New Zealand dollar held onto gains through trade on Thursday, as currency markets failed to keep pace with moves in equities and bond yields. The S&P 500 made fresh highs overnight, while US 10-year bond yields fell 10 basis points, prompting further US dollar weakness. Having pushed through 0.7150, the NZD touched intraday highs at 0.7180, maintaining a narrow range through much of the overnight session with investors largely ignoring strong gains in US domestic retail sales, manufacturing and unemployment claims.

With little of note on today’s macroeconomic agenda, our attentions remain with price action across bond prices and the underlying risk narrative. Further yield weakness could amplify USD losses and help the NZD push through resistance at 0.7180/90 and beyond 0.72 US cents.

Key Movers

Price action across currency markets was largely muted through trade on Thursday, as sustained risk demand helped commodity and emerging markets hold onto Wednesday’s uptick. The US dollar came under sustained pressure amid falling bond yields, as investors largely ignored gains in key macroeconomic data sets. Retail and Core Retail sales jumped sharply in March, comfortably surpassing market expectations, while the Philly Fe manufacturing index outperformed, and unemployment claims printed well below expectations. The dollar index touched intraday lows at 91.50, before edging back toward 91.70 ahead of this mornings Australasian open.

The euro offered little to excite investors, having failed to break back above 1.20 and trades just below this psychological handle at 1.1968.

Sterling edged marginally higher touching highs at 1.3810, before slipping back toward 1.3780.

With little of note on today's ticket, our focus remains with bond prices and risk appetite for direction into the weekly close.

Expected Ranges

NZD/USD: 0.7090 - 0.7220 ▲

NZD/EUR: 0.5950 - 0.5630 ▲

GBP/NZD: 1.9120 - 1.9330 ▼

NZD/AUD: 0.9180 - 0.9270 ▲

NZD/CAD: 0.8930 - 0.9050 ▲