Kiwi falters as risk off mood takes hold
Friday 3 April, 2020
Daily Currency UpdateNZD - New Zealand DollarThe New Zealand dollar fell through trade on Thursday, testing moves below 0.59 as risk sentiment faltered and investors looked to the USD as a haven asset. Despite strength across commodity currencies lead by a 25% rebound in oil prices the NZD struggled to mount any real upward momentum. Having enjoyed strong gains through last week and this weeks open the NZD upturn has stalled through recent days as broader market fears surrounding the impact of the coronavirus outweigh underlying economic fundamentals. Much like its antipodean counterpart the NZD looks attractively cheap at the current levels. Medium and longer term forecast still suggest the NZD will appreciate, however as the Pandemic continues to spread and the number of cases worldwide push through 1 million the length and breadth of this pandemic is expected to worsen. The longer the period of controlled social distancing the longer the economic recovery with demand for risk likely weighing on any sustained NZD uptick. Watch support on moves below 0.59 with resistance and profit taking on extensions above 0.60.
Key MoversThe US Dollar climbed through trade on Thursday reversing the recent downtrend and marking a second straight daily advance. Investor concerns surrounding the state of the coronavirus and the looming global recession prompted a sustained risk off run and push toward haven assets. A grim milestone was reached Thursday with 1million cases of COVID 19 recorded globally, a fifth of which are in the US. With over 200,000 Americans already confirmed to have contracted the virus and the US woefully ill-prepared to deal with the outbreak there are real fears the US will outstrip Italy’s casualty rate in the weeks ahead. Vice President Mike Pence affirmed such fears Wednesday suggesting the US was on a trajectory comparable to Italy, stating that a horrific few weeks lay ahead. Investors largely ignored a 3,000% jump in jobless claims with 6.65million American filing for unemployment through the last week. The print dwarfed medium estimates and only served to highlight the economic footprint likely to be left behind by the spreading pandemic. Attentions remain squarely affixed to the evolving pandemic and we expect the US Dollar will remain largely well bid as risk sentiment continues to falter in the face of the unrelenting pandemic. That said with US funding costs easing topside moves amid normalized trading patterns are likely to be modest and more measured, while a sharp correction remains in play should panic envelop broader financial markets again. EUR/USD fell below 1.09 and currently sits at 1.0858. Sterling pulled off highs above 1.2450 to open the Australasian session at 1.2392. The CAD and NOK outstrip all major counterparts, buoyed by a 25% resurgence in oil prices.
- NZD/USD: 0.5820 - 0.6020 ▼
- NZD/EUR: 0.5350 - 0.5520 ▲
- GBP/NZD: 2.0370 - 2.1230 ▲
- NZD/AUD: 0.9690 - 0.9880 ▲
- NZD/CAD: 0.8290 - 0.8430 ▼