Forex Flash: NZD proves to be resilient despite European banking woes – BNZ

FXstreet.com (Barcelona) - The NZD has started the week in consolidation mode – indeed the currency was sidelined overnight and, as a result, essentially drifted sideways in a tight 0.8335-0.8370 range. Meanwhile, “the steady performance of the NZD (and AUD for that matter) is somewhat surprising given the carnage in Europe. Investors’ initial relief over the signing of a bailout deal for Cyprus has given way to uncertainty and outright fear after an official implied the deposit levy used in Cyprus could become the norm for dealing with banking crises in Europe.” writes the BNZ Strategy team.

Despite a plunge in the EUR, and consequent broad strengthening the USD, the losses in the NZD/USD were limited to around 0.8335. Steady NZD/EUR demand and further gains in NZ-US interest rate differentials go some way towards explaining the resilience of the NZD.