NZD continues to press 0.72 cents as attentions turn to slew of central bank data

Key Movers

Demand for commodity currencies remained in the black through trade on Monday as the AUD, NZD and CAD outperformed most other major counterparts. The Euro moved off Friday’s low bouncing off 1.1545 to break back through 1.16, while the GBP, JPY and USD all drifted lower. Price action and moves were largely well contained, and it appears markets are simply adjusting positions leading into a slew of central bank policy updates. Outside the RBA policy update today our attentions turn to the Bank of England and US Federal Reserve. The Bank of England’s MPC is slated to raise interest rates in a bid to control domestic inflationary pressures. With the domestic economic recovery so fragile there is real concern the move may disrupt the reclamation of robust economic growth and instead derail growth prospects. We are keenly attuned to the commentary surrounding the decision in a bid to understand future policy and longer run impacts of a broader monetary policy tightening. The Federal reserve is widely tipped to announce the beginnings of QE tapering. With domestic macroeconomic indicators softening through Q2 and Q3 thanks to the prolific spread of the Delta variant there is scope to suggest the Fed may adopt a more cautious monetary policy normalisation. A slower path to normality should help fuel demand across risk assets and underpin recent USD weakness.