Daily Currency Update

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NZD outperforms major counterparts and eyes yearly high.

NZD - New Zealand Dollar

The New Zealand dollar outperformed through trade on Monday, outpacing all major counterparts amid a sustained risk on mood. Sustained US dollar weakness amid amended fiscal infrastructure expectations and renewed optimism for a robust economic recovery following Friday’s upbeat PMI data dump helped fuel demand for risk assets, pushing the NZD through 0.72 to touch intraday highs at 0.7244. Having pushed through resistance at 0.7220/30 there is scope to suggest the NZD could extend toward the yearly high at 0.7315 on a sustained risk rally. Our attentions turn now to a host of key indicators for direction through the rest of the week. US Q1 GDP and inflation markers headline Euro growth data and China’s PMI print while President Biden is to address congress and outline his American Family Plan. It was this bill that sparked last week’s price action after the President noted he would significantly raise capital gains taxes to pay for it. Having flattened out through the latter half of the overnight session the NZD now buys 0.7131 US cents.

Key Movers

The US dollar continued to test new lows through trade on Monday as renewed demand for risk and an upswing in Euro optimism forced the dollar index toward intraday lows at 90.70. Reports US fiscal stimulus and infrastructure plans will meet further delays after democratic senator Manchin pushed back on President’s Biden’s stimulus plans opting to support the Republican’s 600bn counter proposal. Senator Manchin remains a crucial vote for democrats if they are to push on with their recovery plan. Failure to secure his support will make it difficult to push through the Senate any may mean another stalemate and extended delays into the 2022 mid term elections as bi-partisan politics overwhelm the recovery effort.

The Euro extended back toward 1.21 as renewed optimism in Europe’s vaccine program and signs the 3rd wave of COVID19 infections is easing have helped fuel demand for the single currency. The GBP struggled again to extend beyond 1.40 yet remains well supported above 1.37 as our attentions turn toward next week’s Bank of England policy meeting and rate statement.

Expected Ranges

NZD/USD: 0.7150 - 0.7280 ▲

NZD/EUR: 0.5910 - 0.6020 ▲

GBP/NZD: 1.9020 - 1.9320 ▼

NZD/AUD: 0.9180 - 0.9290 ▼

NZD/CAD: 0.8920 - 0.9020 ▼