Daily Currency Update

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Kiwi recoups mid-week sell off, but fails to break outside narrow ranges

NZD - New Zealand Dollar

The New Zealand dollar clawed back losses suffered in the wake of Wednesday's risk off shift throughout the day on Thursday, climbing steadily through both the domestic and overnight session. Having bounced off supports at 0.7150, the NZD touched intraday highs at 0.7215, before settling into a narrow 20-point trading handle through the last few hours. Our attentions turn now to a host of European and US PMI data sets. As inflation concerns remain key in governing short-term direction, today’s PMI data dump could provide a valuable insight into future price pressure. Businesses tend to react quickly to current economic conditions and the PMI data should indicate whether input costs are continuing to rise, thus increasing the likelihood of a flow on in rising consumer prices. A significant outperformance could prompt price action into the weekend. Watch supports at 0.7150 and 0.7080 and resistance at 0.7280 and 0.7315.

Key Movers

The US dollar gave up Wednesday’s gains retreating against most majors, as markets quickly shook off the risk off mood, instead driving gains across equities and risk assets. Having slipped below 1.2170, the euro climbed back through 1.22 to touch intraday highs at 1.2230, while the GBP bounced off 1.41 and closed in on another break above 1.42. The momentum the USD enjoyed in the wake of the Fed minutes was shallow and investors have been quick to reverse the USD uptick maintaining the overwhelming bearish outlook. The USD continues to trade near multi-year lows and until we see a definitive shift in the broader risk narrative, or a return to traditional price action where in diverging monetary policy programs and economic performance drive direction, we expect the dollar will remain subdued. Our attentions today turn to a host of PMI data sets. With inflation concerns still a key driver of near-term direction, we are keenly focused on performance through April.

Expected Ranges

NZD/USD: 07150 - 0.7280 ▲

NZD/EUR: 0.5850 - 0.5920 ▲

GBP/NZD: 1.9520 - 1.9780 ▼

NZD/AUD: 0.9230 - 0.9320 ▼

NZD/CAD: 0.8620 - 0.8730 ▼