Kiwi underperforms as month end rebalancing bolsters USD demand
Wednesday 1 April, 2020
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand dollar edged lower through trade on Monday, slipping back below 0.60 US cents on the back of a broad-based USD rally. Having touched intraday highs at 0.6062 shortly after the weekly open the NZD then trended lower touching 0.5985 before creeping upward into the daily close. The NZD found support early following the RBNZ’s promise to help banks access additional liquidity through the use of corporate and asset backed securities. The increased QE measures helped fuel the broader risk on mood before month end rebalancing and USD support forced the NZD lower. Markets have largely brushed aside a slew of dire macroeconomic indicators as rolling global lockdowns bring both domestic economies and the global marketplace to a grinding halt. Instead, risk sentiment continues to drive direction and the Kiwi remains vulnerable to broader volatility and fluctuations in risk demand. Watch resistance on moves approaching 0.6050-0.61 with short term supports on dips below 0.60.
Key MoversThe US dollar advanced against the majority of major counterparts through trade on Monday, finding support after a string of daily depreciations through last week. Month end rebalancing helped bolster demand for the world base currency, driving the dollar index 1 % higher as the Euro fell back through 1.11 and 1.1050 and Sterling’s upturn stalled. While investors have checked the upturn of mid-March there is still ample scope for USD upside. Despite the Fed injecting masses of funding into the global economy and stabilising swap lines USD demand and supply side balances remain fragile while another liquidity squeeze could prompt another run on emerging markets and risk assets driving the dollar higher. Uncertainty continues to dominate direction, and we expect the USD will remain relatively well bid through the short term.
- NZD/USD: 0.5810 - 0.6080 ▼
- NZD/EUR: 0.5280 - 0.5520 ▲
- GBP/NZD: 2.0120 - 2.0730 ▲
- NZD/AUD: 0.9680 - 0.9920 ▼
- NZD/CAD: 0.8380 - 0.8620 ▲