Daily Currency Update
NZD - New Zealand DollarThe overnight session saw the New Zealand Dollar seesaw against its US counterpart. NZD/USD initially ascended from 0.6725 to 0.6759 before retreating back to 0.7713. Although the AUD also rose against the greenback, AUD/NZD fell nearly 50 pips from 1.0880 to 1.0833. Looking to the session ahead, Australian employment data is due out this morning. Despite July’s strong rebound, the unemployment rate is expected to come in higher than 7.5% as the shutdown in Victoria and slowdowns in employment growth in NSW begin to show. On the domestic front, we will also have Q2 GDP released. The market is currently pricing a contraction of -12.5% as the level 4 lockdowns in April significantly restricted Q2 activity in the region. Later in the session we have Eurozone inflation data and the Bank of England monetary policy meeting. With the New Zealand Dollar oscillating around the 0.6730 handle heading this morning, topside resistance is still seen around the 0.7780 handle however with today’s GDP read posing key risks, we could see a fall back through the key 0.6700 handle.
Key Movers
The major event from overnight was the US federal Open Market Committee (FOMC) meeting which failed to surprise markets as the current policy stance was retained. The committee insisted rates will be kept at the current level few at least the next few years and reiterated it will aim for an inflation rate above 2% for some time. The USD index was largely unchanged, rising only 0.2% however the EUR underperformed. EUR/USD fell from 1.8880 to 1.1788 during trade as ECB officials expressed concerns that the recent EUR strength was having a dampening effect on inflation. USD/JPY also fell below 1.05 to touch a six week low of 104.81.
Expected Ranges
- NZD/USD: 0.6710 - 0.6770 ▼
- GBP/NZD: 1.9150 - 1.9300 ▲
- AUD/NZD: 1.0800 - 1.0900 ▼
- NZD/CAD: 0.8845 - 0.8897 ▼