NZD outperforms as risk-on mood spurs run toward two-month high
Written by
Daily Currency Update
The New Zealand dollar outperformed through trade on Monday, up nearly half a per cent on last week's close on the heels of a positive shift in risk sentiment. The NZD started the day on the back foot edging toward intraday lows at US$0.6087, before a risk-on mood enveloped markets from the beginning of the Asian session. This allowed the NZD to extend a break above US$0.61 and mark two-month highs just above US$0.6150.With US and UK markets closed in observance of local public holidays, the NZD retained and consolidated gains through the overnight sessions and opened this morning above US$0.6150. With the domestic docket free of headline data our attentions turn to Australian retail sales, Japan PPI numbers, Eurozone CPI data and a US consumer confidence report for direction.
Key Movers
A risk-on mood enveloped markets through trade on Monday, starting at the open to Asian trade and continuing through the overnight session, forcing the USD lower against major counterparts. The Norwegian Kroner was the day's big winner up near 1% following a surge in oil prices. After suffering its biggest weekly decline in nearly a month, the oil price jumped more than 1% on Monday allowing the NOK to climb 0.8%, spurred on by a positive risk backdrop.The risk backdrop helped the antipodean currencies outperform while allowing markets to ignore dovish commentary from ECB officials and a downturn in European yields. The European Central Bank Chief Economist, Philip Lane, gave a clear and strong signal a rate cut is imminent, firming bets the ECB will cut rates when it meets next week.
Lane was clear policy should remain restrictive but pointed to the fact there is room to remove some restrictiveness and help boost domestic Eurozone activity. European yields fell as markets priced in 61 basis points of cuts into the end of the year. Despite the negative move in European yields, the euro edged higher against the USD as the risk-on mood and push away from haven assets helped prop up the single currency.
Our attention now turns to Japan PPI numbers Eurozone CPI expectations and US consumer confidence data amid a slew of central bank speakers.
Expected Ranges
- NZD/USD: 0.6080 - 0.6180 ▲
- NZD/EUR: 0.5600 - 0.5700 ▲
- GBP/NZD: 2.0600 - 2.0900 ▼
- NZD/AUD: 0.9180 - 0.9260 ▲
- NZD/CAD: 0.8320 - 0.8420 ▲