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Price action steadies after last week’s turbulence

Tuesday 21 June, 2022

Daily Currency Update

The New Zealand dollar edged higher through trade on Monday amid a broader improvement in risk appetite. With little headline news and a largely quiet macroeconomic ticket markets looked to risk assets propelling key equity indices higher and propping up commodity currencies. Having opened at US$0.6305 the NZD marked intraday highs at US$0.6365 before shifting lower into this morning’s open. Following last week's turbulent activity the NZD remains vulnerable to further downside moves and shifts in the broader risk narrative. Global headwinds remain in play and a break below US$0.6300 could trigger another move toward key technical supports and US$0.6220. Our attention today turns to Westpac’s quarterly measure of consumer confidence and the RBA’s policy meeting minutes. With the RBA tipped to issue another 50 basis point hike in July any signal within the minutes that points to a more aggressive path to monetary policy normalisation could force the NZD back toward 0.90 AUD cents while any note of caution could help the NZD consolidate a break above 0.91.

Key Movers

Price action across major currencies was muted through trade on Monday as US markets enjoyed a public holiday Monday and investors set about recovering from last week's surge in volatility. A slew of commentary from key central bank figureheads offered few new insights into future monetary policy changes with speakers re-iterating what markets had already priced in. St Louis Fed President Bullard maintained a hawkish assessment of US economic activity and suggested the Fed must meet market expectations if it is to reign in inflation. ECB president Christine Lagarde affirmed the banks' commitment to raising rates in July and laid bare the case for a move away from negative rates, while Bank of England and MPC member Mann suggested the BoE needs to be more aggressive in its approach to monetary policy if it is to control inflation and avoid a sharp devaluation in the GBP. The Euro, GBP, and JPY showed little net move and are all down when compared with commodity-led crosses. Out attention this week remains on the risk narrative and central bank commentary. Canadian inflation data and a slew of manufacturing and services data from Europe and the US dominate the macroeconomic ticket.

Expected Ranges

  • NZD/USD: 0.6220 - 0.6350 ▲
  • NZD/EUR: 0.5980 - 0.6080 ▲
  • GBP/NZD: 1.9220 - 1.9420 ▼
  • NZD/AUD: 0.9050 - 0.9130 ▲
  • NZD/CAD: 0.8180 - 0.8280 ▲