Daily Currency Update
NZD - New Zealand DollarThe NZD fell 0.4% on Friday against the greenback with risk assets being sold off as markets digested a more serious outlook for the coronavirus situation. With the AUD also being sold off, NZD/AUD remained rangebound, closing the session on Friday at around 0.9670. Consistent with the risk-off mood, NZD/JPY fell nearly 1% on Friday, briefly touching levels below 70 before recovering slightly to finish the session. Tuesday we have NZD building permits for the month of December as well as the RBA interest rate decision across the pond. More importantly, we have Q4 labour market data for the domestic economy due out on Wednesday. Markets are expecting the unemployment rate and wage inflation to remain flat at 4.2% and 2.3% respectively. NZD will continue to take its cues from the developing situation in China.
Key Movers
A barrage of economic data was released on Friday, only to be brushed aside by markets as the ongoing Coronavirus situation out of China demanded full attention. China’s steady manufacturing PMI’s were largely ignored, as were weaker than expected Euro area GDP figures. Global equities were sold off with the S&P500 down 1.8%, the DOW down 2% and the NASDAQ down 1.6%. European equities were also down around 1.3% on Friday with bond yields ticking lower and commodities also under pressure. Safe haven currencies such as JPY and CHF were the best performers on the day as riskier currencies such as AUD and NZD were sold off. USD/JPY and USD/CHF both fell 0.6% whilst the USD index fell 0.5% on the day. GBP also performed well as Brexit was confirmed, although the bulk of the strength has been attributed to some delayed price action following the Bank of England’s unchanged monetary policy stance from the previous day. This weeks calendar includes the RBA interest rate decision on Tuesday, NZ labour market data on Wednesday as well as Labour market data out of the USA later in the week. We expect markets to remain focused on the virus outbreak in China and will be looking at how markets fare on Monday as an indicator of the weeks direction.
Expected Ranges
- NZD/USD: 0.6430 - 0.6495 ▼
- NZD/EUR: 0.5790 - 0.5850 ▼
- GBP/NZD: 2.0370 - 2.0450 ▲
- NZD/AUD: 0.9648 - 0.9675 ▲
- NZD/CAD: 0.8512 - 0.8576 ▼