Kiwi dips below 0.6900 before recovering strongly as risk sentiment improves

Daily Currency Update

NZD - New Zealand DollarRisk sentiment improved overnight, and unlike previous sessions which only saw equity markets rise, commodity prices and risk currencies like the Australian dollar were also buoyed. The strong start to the US earnings session overnight is seen as the catalyst for the improvement in risk sentiment, with the majority of companies beating market expectations so far. NZD/USD initially dipped below 0.6900 to trade at 0.6894 before improving to trade around 0.6977. Similarly, the AUD touched an eight-month low of 0.7290 as Australian retail sales numbers were softer than expected. AUD/USD did recover in line with the reversal in risk sentiment to trade at 0.7360. The outperformance of the NZD forced the AUD/NZD cross to lower from 1.0580 to 1.0545. The economic calendar remains light today with the only major event being the ECB meeting tonight. We are not anticipating any changes to policy setting but a robust discussion on inflation targeting is to be expected. NZD/USD traders will be looking to see if the current reversal in risk can carry the pair back through the key 0.7000 handle today.