Home Daily Commentaries Kimi pummeled as demand for risk falters

Kimi pummeled as demand for risk falters

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar fell sharply through trade on Thursday amid a correction in risk assets and a souring in investors appetite for risk. Equity markets plunged while commodity prices, led by oil, were driven sharply downward amid waning optimism for an economic rebound through the second half of the year. Investors began dumping risk assets following the US federal Reserves, monthly monetary policy and rate setting meeting, where in committee members offered a sobering reminder of challenges and risk still facing the US economy as the impacts of COVID-19 are far from over. Having touched early morning highs at 0.6564 the NZD fell steadily throughout the day, down over 1.5% to touch intraday lows at 0.6413. The question now is, was this move merely a short-term correction of the recent overbought move or the beginnings of a broader shift in risk demand and a deeper shift in sentiment. Attentions today remain squarely affixed to the broader risk narrative.

Key Movers

Safe haven currencies led majors higher through trade on Thursday with the CHF, JPY and USD all benefiting from the shift in risk sentiment. Having lost nearly 5% through the last month the US dollar index jumped sharply, gaining 1% on the day as the AUD, NZD and CAD led commodity currencies lower while the Euro and GBP both suffered modest corrections. As equity markets plunged investors looked to haven assets as demand for risk soured amid a shift in optimism surrounding the speed of an economic rebound. The Federal Reserve reiterated its concerns surrounding the impacts of the coronavirus as the number of cases in the US surpasses 2 million. The US now accounts for 27% of the world’s cases with new hotspots emerging across the country, suggesting a second wave of infections is imminent. With the States still in the throes of the deadly disease a full economic recovery is unlikely in 2020.Sterling fell 1% as reports it will engage in intensified free trade discussions with the EU, reminded investors Brexit still looms larger and the likelihood of a hard break increase as we move closer to the official divorce date.Attentions today remain squarely affixed to the risk narrative.

Expected Ranges

  • NZD/USD: 0.6330 - 0.6550 ▼
  • NZD/EUR: 0.5580 - 0.5750 ▼
  • GBP/NZD: 1.9230 - 1.9850 ▲
  • NZD/AUD: 0.9330 - 0.9450 ▲
  • NZD/CAD: 0.8680 - 0.8790 ▼