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NZD range bound but is support forming on moves approaching 0.71?

Tuesday 14 September, 2021

Daily Currency Update

NZD - New Zealand Dollar

The New Zealand dollar maintained a narrow 25-point handle through trade on Monday, drifting sideways thanks to a lack of headline newsflow and little macroeconomic data. Bouncing between 0.7100 and 0.7125 markets seemed content in sidelining larger bets ahead of a definitive catalyst for change. We anticipate a period of consolidation for the NZD leading into next month's RBNZ policy meeting as investors grapple near term challenges imposed by the delta variant and long run hopes vaccination progress will foster a return to normal throughout 2022. Near term risks remain skewed to the downside yet supports are firming on moves approaching 0.71. A consolidation at this level could help elevate the NZD back toward 0.7315 (year to date high) through Q4 assuming risk sentiment continues to improve. Our attentions today turn to Australian RBA Governor Lowe. Any insight into the bank’s view of the current lockdown and its impact on policy consideration could spark NZD/AUD volatility. With RBA and RBNZ policy on a path of divergence a dovish statement from Lowe could help propel the NZD through 0.97 AUD cents.

Key Movers

Price action across major currencies was virtually non-existent through trade on Monday with most majors maintaining a narrow 0.1% range when valued against the USD. The GBP bounced between 1.38 and 1.3850, while the Euro tracked between 1.1770 and 1.1815 and the JPY maintained a narrow 30-point handle. With no key macroeconomic releases and light newsflow investors appeared content to ease their way into the new trading week, taking stock and consolidating positions amid a recent surge in risk sentiment volatility. Our attentions today turn to US CPI data. With FOMC attentions squarely affixed to labour market performance we expect the market will largely ignore another uptick. Assuming inflation pressures are contained to pandemic sensitive categories and those most impacted by supply constraints then we anticipate the Fed will maintain its current path to tapering and offer little boost to the USD in the near term. Looking beyond CPI data we are looking to a period of consolidation among major currencies with the USD’s safe haven status supporting it through a period of uncertainty.

Expected Ranges

  • NZD/USD: 0.7070 - 0.7150 ▲
  • NZD/EUR: 0.5990 - 0.6080 ▲
  • GBP/NZD: 1.9290 - 1.9530 ▲
  • NZD/AUD: 0.9580 - 0.9720 ▼
  • NZD/CAD: 0.8950 - 0.9030 ▲