Cabinet To Review Covid Alert Levels

Renewed risk aversion applied pressure to NZD/USD Thursday, while deadly explosions in Kabul killed a nascent recovery attempt seen in Europe hours. The rate retreated over the WMR fix and finished the day on the back foot, snapping its three-day winning streak.

• New Zealand's ANZ Consumer Confidence fell 3.1% M/M to 109.6 in August from 113.1 in July, with ANZ noting that "the four-week sampling period closed on 22 August and it's unlikely more than 15% of the sample was post-lockdown". The survey showed an uptick in consumer-price inflation expectations coupled with a slight moderation in anticipated house price growth.
• The main event on the local docket today is the Cabinet's review of Covid-19 alert levels, with the announcement due at 1500NZST/0400BST. Director-General of Health Bloomfield said yesterday that officials consider options such as setting different alert levels between the North and South islands or drawing an "internal boundary" in the North Island.
• Looking further afield, NZ highlights next week include building permits & ANZ Business Confidence (Tuesday) as well as terms of trade (Thursday).
• NZD/USD trades at $0.6951 as we type, marginally above neutral levels. A broader resumption of gains and a move past the 50-DMA at $0.6985 would bring Aug 17 high of $0.7029 into play. Bears look for a retreat under $0.6805, which represents a key layer of support & the low print of Aug 20.