Kiwi breaks key resistance handle and extends back above 0.68 US cents
Thursday 23 December, 2021
Daily Currency UpdateThe New Zealand dollar benefited from an extension in risk appetite Wednesday, stretching through resistance at 0.676/70 and marking new intraday highs at 0.6820. Markets looked through near term Omicron lead headwinds and toward expectations for recovery through Q2, Q3 and Q4 2022. Anecdotal evidence that suggests the Omicron strain won’t have the same devastating effects as the Delta variant has buoyed market hopes for a shallower and shorter contraction in economic activity. With liquidity fading into Christmas and volumes expected to be thin through the coming weeks, volatility across currency markets should subside. We expect the NZD will track between 0.67 and 0.6850 with an extension in the current risk-on play possibly allowing a move toward 0.69.
Key MoversThe US dollar, JPY and CHF came under extended pressure through trade on Wednesday as investors continued to chase risk assets and commodity currencies higher amid fading expectations the Omicron variant will have the same devastating impact on economic activity as its predecessors. The dollar index fell as commodity currencies lead gains and dragged the euro and GBP higher. Sterling pushed through 1.33 and 1.3350 while the euro consolidated an extension through 1.13, marking intraday highs at 1.1340. With little macroeconomic data on hand to drive direction and liquidity fading into the Christmas holiday period, direction will continue to stem from fluctuations in the Omicron narrative.
- NZD/USD: 0.6700 - 0.6850 ▲
- NZD/EUR: 0.5980 - 0.6050 ▲
- GBP/NZD: 1.9530 - 1.9720 ▼
- NZD/AUD: 0.9390 - 0.9480 ▼
- NZD/CAD: 0.8710 - 0.8780 ▲