Kiwi, the worst performer among major currency peers
Wednesday 26 February, 2020
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand dollar was the worst performer among major currencies through trade on Tuesday as markets appetite for risk remained muted. Having touched intraday highs at 0.6355 the NZD tested supports at 0.6300/10, bouncing off session lows at 0.6311. Having lost over 3% through the last 5 days the Kiwi has suffered wholesale losses against all major counterparts as markets shift away from risk driven assets in a flight for safety. As coronavirus morphs into a global pandemic markets have been forced to re-adjust expectations for global growth as the impact to GDP is expected to escalate. With cases spreading in countries outside China fear across financial markets is increasingly driving direction and we anticipate the NZD will remain under sustained pressure through the medium term. Watch support at 0.6300/10, with a consolidated break below this handle signaling another downward correction.
Key MoversThe US dollar slipped against most majors (with exception of the AUD and NZD) as the sell off across currency markets stalled through trade on Tuesday. While a broader risk off mood continues to permeate market trends the rush to safety slowed forcing the dollar lower against the Euro, Pound, Canadian Dollar, Yen and Swiss Franc. With market fears tempered attentions turned to escalating expectations the FED will cut interest rates in June. Futures showed the likelihood of a rate cut had increased to nearly 80% on Tuesday with just 4% of investors expecting rates to remain in the current band come the end of the year. The correction in interest rate expectations throughout the last month has been largely overshadowed by the broader risk off mood, but leaves the door open for a USD correction if a shift in the current demand for risk arises. The Euro jumped back through 1.0850 to touch 1.0882 while the GBP pushed back through 1.30 and the Yen forced the dollar back below 110.With little of note on the domestic docket through trade on Wednesday attentions remain squarely affixed on developments in the Coronavirus ahead of prelim GDP data and core durable goods orders Thursday.
- NZD/USD: 0.6280 - 0.6350 ▼
- NZD/EUR: 0.5750 - 0.5850 ▼
- GBP/NZD: 2.0280 - 2.0710 ▲
- NZD/AUD: 0.9560 - 0.9630 ▼
- NZD/CAD: 0.8370 - 0.8450 ▼