New Zealand Dollar struggles to regain momentum
Friday 21 August, 2020
Daily Currency UpdateThe New Zealand dollar struggled to regain its momentum yesterday after falling a full cent from eight-month highs following the release of US Federal Reserve minutes. Declining from Wednesday night highs of 0.6650, the local currency opened at 0.6560 and continued its shift lower yesterday to intraday lows of 0.6488 during the Asian session amid falling oil prices.
Daily losses were clawed back slightly regaining 0.5% from overnight lows but remained an underperformer. Reaching a high of 0.6541 during the North American session following a recovery in equity prices, markets saw the resumption of pressure against the greenback, hovering around two-year lows.
With the economy facing further lockdown pressures, the New Zealand dollar also saw two-year lows against its Trans-Tasman neighbour touching 0.9063 against the Australian Dollar.
The New Zealand dollar opens this morning at 0.6535. We expect support levels to hold on moves approaching 0.6480, while any upward push will likely meet resistance at the 66 US cent handle.
Key MoversCommodity linked currencies were broadly lower over the past 24 hours with the New Zealand dollar seeing the biggest losses on weaker oil prices overnight. Oil prices dropped on concerns for the worlds largest offshore oil rig company – Valaris Plc who filled for voluntary bankruptcy in the Southern District of Texas as they looked to restructure $7 billion in debt.
The US Dollar Index (DXY) was largely unmoved seeing a 0.28% loss on the day and the greenback was 0.2% lower against the Japanese Yen. Unemployment Claims were higher than expected as 1.1 million Americans filed for unemployment claims for the week ending 15th August. The large number places unemployment above 10% and puts further pressure on congress to provide further stimulus to the world’s largest economy.
The Great British Pound looked to test eight-month highs that investors saw on Wednesday evening, gaining 0.8% on the day to 1.3220. Markets saw strong buying on dips into the 1.3050 region. A round of European and United Kingdom Manufacturing and Services PMI is due for release this evening to close off the week.
- NZD/USD: 0.6480 - 0.6600 ▼
- NZD/AUD: 0.9050 - 0.9150 ▼
- GBP/NZD: 2.0000 - 2.0400 ▲
- NZD/EUR: 0.5480 - 0.5570 ▼
- NZD/CAD: 0.8580 - 0.8680 ▼