Kiwi looks to hold onto gains after briefly touching 0.68
Monday 9 November, 2020
Daily Currency UpdateThe New Zealand Dollar closed well in the positive last week, touching 0.68 on several occasions for the first time in 18 months as the US election dominated currency movements. With President-Elect Biden in the hot seat and the S&P 500 soaring, global risk assets followed suit with the Kiwi no exception. Opening this morning at 0.6769, the Kiwi looks to hold onto last weeks gains to start the week.
The Pandemic Election kicked off last Tuesday and almost immediately added volatility into foreign exchange markets globally. As the counting began and the results filtered through, the Kiwi found support from any signs that Joe Biden would win the election. Nevertheless, the election again made a mockery of the polls with the race becoming too close to call on several occasions and the favourite fluctuating throughout the count. The Kiwi followed proceedings in kind with movements to as low as 0.6613 at one point but ultimately found its feet as it become clear that Biden was pulling ahead in key battleground states. As the market drew to a close on Friday and the election still too close to call, the Kiwi continued its optimism in a Joe Biden victory and stayed well supported at 0.6775 to record a relatively stable day for what proved to be an erratic week at times.
The week ahead looks to be relatively quiet on the economic calendar with direction to again be dictated by US politics and COVID-19. While the election result reported by major US media firms seems clear and decisive, President Trump has thus far refused to concede. Furthermore, unsubstantiated allegations of fraud and malfeasance by President Trump have added uncertainty into proceedings and in-turn financial markets. Closer to home, the Kiwi will turn to the RBNZ Monetary Policy Statement on Wednesday for direction with the RBNZ expected to hold rates unchanged at 0.25%. They are however, also expected to announce their Funding for Lending Programme and maintain an easing bias.
Key MoversSafe haven currencies found little support during election week with the US Dollar, Swiss Franc and the Japanese Yen all softening as President-Elect Biden pulled ahead of President Trump. Risk assets outperformed as a consequence with equities and commodity currencies doing particularly well. This comes despite President Trump's claims of victory and fraudulent voting casting dispersions on the outcome of the election and adding an element of uncertainty. Furthermore, the market continues to shrug off the threats of a Trump legal challenge as non-credible.
On Friday itself, the Euro was the top performer, rising 0.4% to around 1.1875, its highest level in more than a month and within touching distance of the psychologically important 1.20 level.
Moving forward, other than US politics and COVID-19, the Great British Pound is also set to have a big week with further Brexit negotiations taking place ahead of the 15th November date that both the UK and the EU have previously indicates as the deadline for a deal.
- NZD/AUD: 0.9231 - 0.9429 ▼
- NZD/CAD: 0.8746 - 0.8951 ▲
- NZD/EUR: 0.5601 - 0.5811 ▲
- GBP/NZD: 1.9209 - 1.9598 ▼
- NZD/USD: 0.6668 - 0.6858 ▲