NZD/USD testing 0.69 after touching multi-month highs

Daily Currency Update

NZD - New Zealand DollarThe overnight session saw the New Zealand Dollar fall slightly against the greenback despite upbeat global equity markets. Having initially soared to 0.6904 following the RBNZ, the New Zealand Dollar has fallen back below the key 0.6900 handle to settle this morning around 0.6870. The New Zealand Dollar outperformed the Australian Dollar yesterday, ultimately forcing the AUD/NZD cross lower to 1.0572, representing a 4-month low. Recapping yesterday’s RBNZ decision, the central bank provided further stimulus in the form of the Funding for Lending Program. The program, which aims to lower the cost of funding for domestic banks was largely in line with market expectations. A core takeaway from the meeting however was the central bank’s modelling which pointed to a much stronger domestic economy than previously expected. This reduces the probability the RBNZ will be forced to adopt negative cash rates and provoked a significant market reaction as speculative trades based on negative future rates were unwound. Looking to the day ahead, we will get New Zealand net migration data, which will obviously remain subdued due to the lockdowns before focus will shift offshore. In Australia, we will get inflation expectations from the Melbourne institute, Industrial production data out of the Eurozone, UK trade balance and GDP data and finally US October CPI is due.Having breached 0.6900 briefly, traders will be looking for a consolidation above this level before moves to the 2019 peak at 0.6940 are considered. On the downside, clear supports are at the 0.6800 and the October high of 0.6725