Optimism surrounding vaccines drives NZD higher
Thursday 19 November, 2020
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand dollar extended through 0.69 US cents on Wednesday as the risk backdrop found added support in more positive vaccine news. Pfizer released a comprehensive review of the results from its phase 3 trial, showing an improvement in the vaccines overall effectiveness across all demographics. The vaccine is said to work well across a variety of ethnic groups and ages. With no safety concerns reported, hopes for a mass roll out before Christmas prompted modest risk on gains. Marking a fresh 20 month and intraday high at 0.6940 the NZD has retreated marginally into this morning’s open and currently buys 0.6918 US cents. With little of note on the domestic macroeconomic calendar direction will again stem from fluctuations in the risk narrative. Investors continue to weigh long-term optimism against near term headwinds creating barriers to extend topside gains. That said the NZD has enjoyed a series of higher highs and higher lows through the last fortnight suggesting another break higher could materialise.
Key MoversThe US dollar fell across the board and remains under pressure as an improving risk backdrop sees investors shift away from safe havens and look toward equities, emerging market and commodity currencies. The Dollar index, which measure the USD against a basket of major counterparts, fell 0.2%, a relatively muted response given the scale of the risk on shift and most likely supported by broad based euro softness. The single currency struggled to extend gains against the USD edging only marginally higher as concerns surrounding the ratification of the €750billion Euro recovery fund emerge. Hungary and Poland have so far refused to ratify the agreement in protest or opposition to the rule of law condition, claiming each country should be able to distribute funds as they see fit. Fears internal disagreements will derail the planned January release of funds have weighed on the combined currency and could grow if a compromise cannot be found in the coming weeks. Attentions today remain affixed to the broader risk narrative.
- NZD/USD: 0.6850 - 0.6940 ▲
- NZD/EUR: 0.5780 - 0.5890 ▲
- GBP/NZD: 1.9020 - 1.9280 ▼
- NZD/AUD: 0.9410 - 0.9505 ▲
- NZD/CAD: 0.9020 - 0.9080 ▲