Daily Currency Update

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NZD underperforms as action across commodity currencies mixed

NZD - New Zealand Dollar

The New Zealand dollar underperformed through trade on Monday giving up half a percent in what was a mixed start to the week for commodity currencies. Having opened near 0.7250 the NZD fell steadily throughout the domestic session slipping through 0.72 to touch intraday lows at 0.7182. There appears little justification for the days sell-off outside profit taking following Friday’s outperformance and a sustained risk-off backdrop. The NZD did find some momentum through the overnight session clawing its way back above 0.72 to open this morning at 0.7220. With little of note on today’s macroeconomic ticket, our attentions remain with the broader risk narrative and near-term inflation expectations. PPI data Wednesday could provide some insight into rising input costs and perhaps act as a marker for an uptick in underlying price pressures ahead of next week's RBNZ policy meeting. We expect the NZD will remain range-bound for much of the week bouncing between 0.7150 and 0.7280.

Key Movers

Price action across the major currencies offered little to excite investors on Monday with the EUR and JPY enjoying only modest gains against the USD while the CAD and GBP both rose 0.3%. The CAD outperformed her commodity counterparts, buoyed by an uptick in oil prices with both WTI and Brent Crude climbing 1.5%. Expectations oil prices will continue to climb as Europe and the US re-open their economies could help fuel further CAD gains through the medium term.

The Great British pound consolidated its push above 1.40, marking new intraday highs at 1.4147. Having underperformed through April, sterling appears set for a period of outperformance as the UK appears on track to immunise the majority of the adult population by July and the economic recovery/re-opening gathers pace. Our attentions now turn to Bank of England Governor Bailey as he outlines a path to quantitative easing to the House of Lords Economic Affairs Committee.

Expected Ranges

NZD/USD: 0.7150 - 0.7280 ▼

NZD/EUR: 0.5890 - 0.5970 ▼

GBP/NZD: 1.9380 - 1.9720 ▲

NZD/AUD: 0.9230 - 0.9340 ▼

NZD/CAD: 0.8640 - 0.8780 ▼