Kiwi underperformance continues as supports broken
Wednesday 29 January, 2020
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand Dollar fell through trade on Tuesday touching intraday lows at 0.6521. Despite a correction in risk appetite and a short term rebound in offshore Yuan the NZD continued to underperform. A flattening f NZ interest rates and lower yield return on 2 and 10 year swaps hurt the NZD as US rates rose and demand for a higher yield forced investors toward the worlds base unit. With little of note on today’s domestic economic docket attentions remain squarely affixed to Coronavirus headlines as developments and news filter through, while the US Federal Reserve and FOMC policy decision heads all other macroeconomic drivers. Having broken supports at 0.6580 attentions now turn to trend lines at 0.6520 and 0.6480.
Key MoversThe Great British pound was the biggest looser through trade on Tuesday falling back through 1.30 for the first time since mid-January. Touching one-week lows Sterling came under pressure when valued against both the USD and Euro as the reality of the UK leaving the European single market on Friday and the possibility of a Bank of England Rate cut today sink in. Having touched 1.2975 the Pound found some support edging back toward 1.30 into the close as investors appear reluctant to pull the trigger and extend moves ahead of these two key market events. The US Dollar bounced against other safe haven assets, up against both the Yen and Swiss Franc as concerns concerning the Coronavirus calmed through Tuesday. While news and headlines are running on a 24-hour delay, the low mortality rate has helped ease fears the impact of the virus will spread to the broader global economy, fostering an expectation the economic impact will the largely regionalised. US consumer confidence also rose by more than expected, touching 5 month highs while durable goods orders where bolstered by increased defence spending. The dollar index is up 0.02% at 97.98 at time of writing. Attentions now turn to tonight FOMC policy decision as a key marker governing direction. We anticipate policy makers will leave rates unchanged.
- NZD/USD: 0.6460 - 0.6620 ▼
- NZD/EUR: 0.5915 - 0.5990 ▼
- GBP/NZD: 1.9680 - 2.0050 ▼
- NZD/AUD: 0.9580 - 0.9720 ▼
- NZD/CAD: 0.8580 - 0.8640 ▼