Daily Currency Update

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Kiwi ticks marginally higher in face of general risk off mood

NZD - New Zealand Dollar

The New Zealand dollar struggled to find momentum through trade on Monday as broader risk-off sentiment governed direction. Despite a downturn in core consumer retail sales and a miss in broader consumer spending patterns the NZD remained largely well supported as investors looked to square positions following Friday’s downturn. Having touched intraday lows at 0.6305 the NZD creeped marginally higher reaching session highs at 0.6655, before slipping lower into the daily close.

With little of note on today’s domestic docket attentions remains squarely affixed to coronavirus headlines. With support at 0.6300/05 still intact we expect the NZD will remain range bound while risk appetite remains muted. A break below 0.63 could prompt a deeper correction toward 0.6280 with resistance forming on moves approaching 0.6650.

Key Movers

Traditional safe havens were the big winners on Monday as investors dumped risk assets in the face of widespread risk off sentiment. The JPY and CHF jumped higher as the number of coronavirus cases outside China surged again. Stocks and equities fell sharply, while Wall streets volatility index touched 6-month highs and gold rallied to a 7-year peak. Fears a global pandemic is at hand have forced markets to re-asses global growth estimates as the broader impact of the coronavirus continues to grow.

The USD downturn against the JPY and CHF continued through Monday as the risk of environment and last weeks macroeconomic miss amplified calls for a FOMC and Fed rate cut. Investors priced in an increased chance of an interest rate adjustment by June forcing the dollar index back toward 99 at 99.30.

The Great British pound fell through trade on Monday as risk off pushed markets to haven assets and away from sterling as fears the EU and UK will fail to reach a revised trade agreement by the end of the 11 month negotiation period. Losing 0.2%, cable touched 1.2930 and weakened against the Euro.

Attentions today remain with coronavirus headlines as the primary marker driving broader risk off sentiment.

Expected Ranges

NZD/USD: 0.6305 - 0.6420 ▲

NZD/EUR: 0.5825 - 0.5880 ▲

GBP/NZD: 2.0280 - 2.0520 ▼

NZD/AUD: 0.9560 - 0.9630 ▲

NZD/CAD: 0.8330 - 0.8450 ▲