NZD edges higher as CNY hits three-year highs

Daily Currency Update

The New Zealand dollar edged higher through trade on Wednesday, maintaining its upward momentum to break above 0.68 US cents amid renewed optimism surrounding the Chinese economic outlook and fading fears the Omicron variant will derail the global economic recovery. Investors remain hopeful that a reduction in the RRR requirement for banks and eased restrictions on the property market will help reset the Chinese economy and stop the spread of contagion amid the Evergrande restructuring. The accommodative policy program has helped drive CNY gains, pushing the local unit toward three-year highs and dragging both the NZD and AUD along with it. Often consider a proxy to Chinese growth and the yuan, the NZD the resurgence in risk sentiment and improved outlook has helped the NZD stave off a break below 0.67 US cents. Having tested fresh lows on Friday the currency has recovered to mark overnight highs at 0.6820. Our attentions turn to a number of key domestic data sets today. Manufacturing, Wholesale sales and Business services data will all help shape our Q4 GDP predictions. With much of the country restricted by health and safety protocols we expect a modest reading that belies the current environment.