NZD toys with break below 0.71 US cents
Daily Currency Update
NZD - New Zealand Dollar
The New Zealand dollar opens above 0.71 US cents this morning having tested a break below support at 0.7080 through trade on Wednesday. Tuesday’s risk aversion permeated sentiment early, while concerns another COVID-19 outbreak in China could again derail hopes for a recovery in economic growth escalated amid a slew of negative headlines emerging from Fujian province. A risk-off vibe dominated through the Asian session forcing the NZD to intraday lows at 0.7075 before broader USD weakness and an uptick in oil prices helped drag commodity connected currencies higher. The NZD pushed toward highs at 0.7115 and has tracked sideways through the last few hours. Trade action remains focused on moves at and around 0.71 with support forming on breaks below this handle and resistance capping gains on extensions approaching 0.7130/50.
Our attentions today remain with the broader risk narrative and the evolving COVID-19 outbreak in China. Worsening conditions and an extended lockdown could be the catalyst needed to spark another risk-off run.
Key Movers
Price Action across major currencies was limited through trade on Wednesday with the Norwegian kroner and Canadian dollar the only units to offer any impetus for excitement. Buoyed by a 3% surge in oil prices the currency outpaced all other counterparts advancing 0.7% and 0.3% respectively. The US dollar is broadly weaker while sterling found supports on a stronger than anticipated CPI inflation print. Data showed price pressures in the UK surged at the strongest pace of increase in over nine years, firming expectations the Bank of England will have no choice but to raise interest rates. Sterling advanced 0.2% toward 1.3850. Broader risk aversion and global economic uncertainty are expected to continue to cap gains in the near term but a widening spread between the base rate and gilt yields should offer the pound some support on moves below 1.38 and approaching 1.37.Expected Ranges
- NZD/USD: 0.7070 - 0.7150 ▲
- NZD/EUR: 0.5970 - 0.6050 ▲
- GBP/NZD: 1.9330 - 1.9580 ▲
- NZD/AUD: 0.9630 - 0.9720 ▲
- NZD/CAD: 0.8950 - 0.9030 ▼