NZD largely steady amid fluctuations in sentiment and commodity prices

Daily Currency Update

The New Zealand dollar rallied through trade on Friday as market sentiment improved considerably. Equities surged and the USD was broadly weaker as investors appeared confident that war would be contained to Ukraine, while new sanctions did little to impact key Russian exports, namely, oil and gas. The NZD closed the week marginally below 0.6750, up 0.7% on the day, seemingly resistant to last weeks events as the fluctuation in risk appetite and commodity prices continue to provide support and resistance. With direction driven by risk sentiment the NZD’s ability to hold onto recent upside will depend on the underlying risk narrative. Already on open the NZD has shifted back below 0.67 US cents, tracking between 0.6660 and 0.6715 to start the week. The escalation in fighting over the weekend and the increase in sanctions bodes ill for risk demand moving forward. With Russia being strategically removed from the SWIFT international payments network, NATO allies increasing the supply of lethal aid and Russia’s inability to roll through Ukraine thanks to stout resistance suggest this war will drag on for months. Putin has readied Russia nuclear deterrence forces, further evidence he and the Kremlin will stop at nothing to see this “special military operation” through. Our attentions remain affixed to ongoing developments.