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Kiwi tumbles through 0.60 US cents as demand for liquidity props up USD

NZD - New Zealand Dollar

The New Zealand dollar tumbled through 0.60 Us cents overnight as broad-based US strength forced investors to extend losses and break psychological support handles. Despite improvements in risk demand, evidence in the bounce across equities the NZD touched intraday lows at 0.5960, its lowest level since the GFC. The US dollar found support on the back of detailed 800billion dollar fiscal stimulus package designed to target key embattled industries and ordinary US citizens in a bid to stave off recession and address both the supply and demand crisis fostered by the spreading COVID19 virus.

Attentions remain squarely affixed to this unfolding health crisis and the global response. With global health officials suggesting the initial and immediate outbreak will persist for months to comes we expect the economic impact will intensify with adding mounting pressure on commodity and emerging market currencies.

Key Movers

The US dollar advanced against the majority of counterparts through trade on Tuesday, buoyed by an increased demand for liquidity as investors and corporate entities rush to sure up equity lines, while the risk of broader shutdowns dampens demand for risk. Despite moves from central banks across the world, funding markets continue to show signs of stress when sourcing the worlds base currency, forcing investors away from commodity driven and emerging market assets. Having been driven lower in the back half of February the US dollar has since rebounded as global appetite for risk evaporates and widespread panic prompt’s investors to look for haven assets. Advancing some 5%+ since March 9th we expect the USD will remain well bid through the short term – medium term.

The Euro has relinquished nearly all its resent gains dipping back to 1.10 while the Great British Pound has plunged well below 1.30, testing supports at 1.20 having touched intraday lows at 1.2011.

Attentions remain squarely affixed to the enveloping health crisis with risk demand the primary driver across currency markets through the foreseeable future.

Expected Ranges

NZD/USD: 0.5880 - 0.6090 ▼

NZD/EUR: 0.5330 - 0.5460 ▼

GBP/NZD: 1.9980 - 2.0420 ▲

NZD/AUD: 0.9820 - 1.0080 ▲

NZD/CAD: 0.8350 - 0.8510 ▼