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Kiwi ends August as worst performer among G10 currencies

NZD - New Zealand Dollar

Following a string of disappointing mid-week domestic economic indicators the Kiwi continued its slide throughout trade on Friday, falling below 0.63 for the first time in four years. Commodity currencies suffered across the board as US/China trade hostilities reached new heights with President Trump levelling a further 15% tariff on 110 billion dollars’ worth of Chinese exports. The kiwi fell four tenths of one percent to touch intraday lows at 0.6283, cementing itself as the worst performer among G-10 currencies throughout August.

The New Zealand dollar plunged 4% in August and 7% since mid-July as RBNZ easing coupled with diminishing demand for risk has forced investors toward haven assets. And, with trade tensions seemingly far from resolved and global economic performance tilting ever closer to a recession there is little hope for a sustained recovery through the short term. Having broken below 0.63 we are now eyeing possible moves below 0.6250 and even 0.62 as underlying and fundamental headwinds continue to weigh on the NZD. While there is scope to suggest the speed of the downturn could prompt a correction, we anticipate upside gains to be mild as downside pressures dominate broader direction.

This week our attentions turn to broader risk flows and offshore data sets with Chinese manufacturing dominating Monday’s docket.

Key Movers

The Euro was the worst performer among major currencies on Friday breaking below 1.10 for the first time in over 2 years as investors position themselves for ECB policy easing throughout September. Expectations the ECB will at least cut interest rates this month coupled with Brexit uncertainties, poor domestic economic indicators and persistent Italian political uncertainty have forced investors away from the common currency. Touching 1.0967 the Euro struggled to make any meaningful upturn and remains vulnerable to further downward pressures.

Expected Ranges

NZD/USD: 0.6250 - 0.6350 ▼

NZD/EUR: 0.5690 - 0.5790 ▲

GBP/NZD: 1.9130 - 1.9450 ▼

NZD/AUD: 0.9300 - 0.9480 ▼