Daily Currency Update

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Kiwi shifts lower as a global recession looms large

NZD - New Zealand Dollar

The New Zealand dollar fell through trade on Tuesday as trade patterns normalised and direction followed typical fundamental principles. The announcement of government policy action driven by the US, UK and Australia helped ease panic that swallowed markets throughout Monday, prompting a recovery in US rates and treasury yields, fostering a bounce in the worlds base currency and dip in the NZD. The Kiwi fell over 1 % Tuesday, dipping below 0.63 to touch intraday lows at 0.6247 before edging marginally higher into this morning’s open.

With little of note on today’s domestic docket attentions remain affixed to the evolving impacts of the coronavirus. While the number of new cases being reported in China each day is falling the global spread, specifically in Italy, Iran and South Korea remains largely out of control, suggesting it will be some time before COVID19 is contained. As we edged nearer a domestic and global recession, we anticipate the NZD will plumb new lows with a worst-case ongoing pandemic quite possibly prompting a dip below 0.60 US cents.

Key Movers

The US dollar enjoyed strong gains through trade on Tuesday, recouping Monday’s losses as stocks and treasury yields rebounded in response to measures enacted by President Trump to combat the economic downturn foisted on the economy by the COVID19 virus. The Dollar jumped against a basket of major counterparts pushing the Yen, Euro GBP and Swiss Franc lower and the Dollar index back above 96.00.

Having touched 1.1495 the Euro fell back through 1.14 and 1.13 to touch 1.1282 while the dollar moved back above 105 Japanese Yen. Despite the normalisation in trading patterns on Tuesday volatility across currency markets has jumped sharply since mid-February and when compared with the moves in equity markets there is ample room for further uncertainty moving forward. Attentions remain squarely affixed to broader risk flows as markets respond to fiscal and monetary policy announcements as the global economy attempts to combat the impacts caused by this unprecedented health pandemic.

Expected Ranges

NZD/USD: 0.6220 - 0.6380 ▼

NZD/EUR: 0.5430 - 0.5630 ▼

GBP/NZD: 2.0230 - 2.0850 ▼

NZD/AUD: 0.9490 - 0.9680 ▲

NZD/CAD: 0.8550 - 0.8715 ▼