Home Daily Commentaries Kiwi range bound as risk on rally fails to extend into currencies

Kiwi range bound as risk on rally fails to extend into currencies

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar offered little to excite investors through trade on Monday as volatility across currency markets was largely muted to start the week. Despite a rebound in equities and a distinct risk on shift the NZD failed to mount any real upward momentum, stalling on attempts to push beyond 0.6440/50. Growing concern for the rapidly increasing number of new coronavirus infections across the US and Latin America have forced investors to take stock of recent gains and the upward rally enjoyed through April and May is well and truly over. With daily infection rates soaring and community transmission out of control a large swath of US states have been forced to unwind relaxed social distancing restrictions and hold off on broader economic re-opening in a bid to control this most recent outbreak. The threat to an immediate v-shaped rebound has spooked investors and while the promise of ongoing fiscal and monetary policy support continue to prop up risk demand upside gains toward and beyond 0.65 will likely be hard fought in the short -medium term.Attentions today turn to ANZ’s business outlook with sentiment a key driver of direction. Having disappointed investors in May another soft print may weigh on NZD demand.

Key Movers

Haven currencies were the days big losers as the JPY and CHF both retreated amid an equity led risk on move. While price action across currency markets was largely muted throughout trade on Monday the rebound in the S&P 500 did prompt a small risk on correction forcing the Yen and Franc near half a percent lower as the promise of sustained Federal Reserve support continues to prop up equity markets. Despite growing concerns the renewed COVID19 outbreak will derail the v-shaped recovery and disrupt the risk on mood there is a sense the Fed will simply step in and support financial markets by any means necessary, propping up equity prices and perhaps sustaining the current risk on move beyond its natural lifeline. The Great British Pound Fell through trade on Monday as concerns regarding Brexit and Britain’s ability to fund planned fiscal infrastructure programs forced the below 1.23 to intraday lows at 1.2252. Attentions today remain squarely affixed to the evolving fight against COVID19 as risk continues to drive direction and underlying fundamentals are largely ignored.

Expected Ranges

  • NZD/USD: 0.6380 - 0.6450 ▼
  • NZD/EUR: 0.5650 - 0.5730 ▼
  • GBP/NZD: 1.9020 - 1.9380 ▼
  • NZD/AUD: 0.9330 - 0.9390 ▼
  • NZD/CAD: 0.8720 - 0.8820 ▼