Kiwi outperforms as investors take stock amid vaccine concerns.
Monday 22 March, 2021
Daily Currency UpdateThe New Zealand dollar outperformed most majors through trade on Monday, advancing 0.3%, testing a break above 0.72 US cents. Having underperformed last week, the NZD enjoyed support through trade on Monday as investors largely ignored reports Germany, Italy and France would join several other European countries in suspending the roll out of Astra Zeneca’s vaccine. Reports the vaccine has caused an increased risk of blood clotting have been refuted by the makers while drug regulators suggested the benefits of continuing immunisation programs far outweigh the risk. While market demand for risk dampened the NZD edged of highs at 0.7215 slipping back below 0.72 and opens at 0.7179. The NZD remains range bound, well supported on moves approaching 0.71 with gains extending toward 0.7230/50 likely to meet resistance through the week ahead.
Key MoversThe US dollar enjoyed a positive start to the week, advancing against a basket of major counterparts as equity markets and treasury yields corrected off Friday’s highs. Having touched a new all time high on Friday the S&P 500 offered only modest gains while 10-year yields fell marginally to 1.61%. Advancing 0.15% the dollar index benefited from a correction in the GBP and Euro with both currencies drifting lower following reports a host of European countries will suspend the use of the Astra Zeneca vaccine. The news is blow to Europe’s broader vaccination program with the common market already considered to be behind the US and UK in inoculating its citizenry, evidenced by the reports Italy has been forced introduced new lock down measures following a string of new cases. The Euro touched lows approaching 1.19 at 1.1910 while Sterling drifted below 1.3950.
With little of note on today’s macroeconomic docket attentions remain affixed to the broader recovery narrative. Any further derailment in the global vaccine narrative could prompt a correction in underlying risk demand.
- NZD/USD: 0.7105 - 0.7220 ▲
- NZD/EUR: 0.5980 - 0.6080 ▲
- GBP/AUD: 1.9120 - 1.9480 ▼
- NZD/AUD: 0.9250 - 0.9340 ▲
- NZD/CAD: 0.8920 - 0.9020 ▲