Daily Currency Update

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Kiwi zeros in on a break above parity against the AUD

NZD - New Zealand Dollar

The New Zealand dollar fluctuated wildly through trade on Monday as volatility across currency markets increased. Having tested a break below 0.60 in the lead up to the RBNZ’s emergency 75 basis point rate reduction the Kiwi then rallied back through 0.61 US cents after the Federal Reserve announced its own monetary policy adjustment.

The RBNZ brought forward its March 25th policy meeting slashing interest rates to 0.25% and committing to hold rates at this handle through the next 12 months (at least) with the promise of a quantitative easing program if required. The proactive response helped fuel demand for NZD/AUD as the Kiwi eyes off a break above parity. Having touched intraday highs at 0.9953 the NZD appears poised to push through the psychological handle as global commodity prices, namely oil, continue to fall adding increasing pressure on Australia’s terms of trade and bolstering the attractiveness of the NZD.

Key Movers

Safe havens were the winners again through trade on Monday as extensive fiscal and monetary policy programs did little to ease broader market concerns and bolster appetite for risk. The Japanese yen jumped, while the CHF and Euro also gained against the USD following the Federal Reserve’s 75 basis point cut to interest rates. With the yield advantage eliminated throughout the last 3 weeks the USD has come under increasing downward pressure as investors scramble to correct net long positions. The dollar index fell a further 0.75% yet ongoing downside may be limited as liquidity pressures and the ongoing risk off mood push investors toward the world’s base currency. With little demand for commodity driven assets and emerging market currencies the USD remains a popular safe haven play propping up what would otherwise be an overtly aggressive downward correction.

Coronavirus fears continue to dominate direction and we expect the USD, JPY, Euro and CHF to remain well bid through the short term as investors scramble to find some certainty and stability.

Expected Ranges

NZD/USD: 0.5980 - 0.6150 ▼

NZD/EUR: 0.5350 - 0.5520 ▼

GBP/NZD: 1.9930 - 2.0580 ▼

NZD/AUD: 0.9750 - 1.0020 ▲

NZD/CAD: 0.8320 - 0.8630 ▲