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Kiwi consolidates move below 0.70, tumbling in face of risk off shift

Thursday 30 September, 2021

Daily Currency Update

NZD - New Zealand Dollar

The New Zealand dollar came under sustained selling pressure through trade on Wednesday, consolidating a move below 0.70 US cents and breaking toward intraday lows at 0.6860. A distinct risk-off tone continues to envelop financial markets and while equities enjoyed a modest rebound and global rates moderated price action across currency markets remains volatile. The NZD gave up over 1% on the day as investors chased USD gains amid haven plays and month-end rebalancing. With commodity currencies vulnerable, the NZD also gave up ground to key major counterparts, slipping against the yen and relinquishing ground to the AUD. A surge in local case numbers and a tailing off in vaccination rates have raised questions about a further easing of restrictions. Prompting a correction in expectations for next month’s RBNZ policy update. Having appeared set for a push beyond 0.98 against the AUD, the NZD has slipped back below 0.96 and appears poised to perhaps give up further ground in the days and weeks ahead. Our attentions today turn to the ANZ business outlook survey for valuable insight into the lockdown impact on confidence, while Chinese PMI and European CPI data dominate the international ticket.

Key Movers

The USD was the day's big winner on Wednesday advancing across the board and pushing beyond key technical resistance handles. The Dollar index is up almost three-quarters of a percent as uncertainty surrounding the global growth outlook and concerns around the US debt ceiling debate drive investors toward haven assets while rising global yields and a delayed reaction to the Fed’s hawkish commentary help underpin gains. The USD broke above 112 against the Japanese yen for the first time in over a year and a half. The euro was forced toward 1.16 and looks set to break this handle in the days ahead as diverging monetary policy platforms and a sluggish growth outlook sour demand for the single unit. And the Great British pound continued its remarkable correction, slipping below 1.3450 before settling at 1.3425. Having tested a break above 1.39 just two weeks ago the pound has given up almost five cents, a move accelerated this week as the market fears a rate hike will derail the fragile economic recovery escalate. Our attentions today remain with the risk narrative.

Expected Ranges

  • NZD/USD: 0.6810 - 0.6990 ▼
  • NZD/EUR: 0.5890 - 0.5960 ▼
  • GBP/NZD: 1.9380 - 1.9680 ▲
  • NZD/AUD: 0.9490 - 0.9590 ▼
  • NZD/CAD: 0.8690 - 0.8830 ▼