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Kiwi closes in on parity against AUD, while marking 11 year lows against the Greenback

NZD - New Zealand Dollar

The New Zealand dollar plunged through trade on Wednesday, marking fresh 11 year lows at .5697. Panic fuelled another run on equities as investors looked to liquidate assets for cash and buy back into the world’s base currency. While central banks attempt to sure up liquidity lines injecting funding into the broader economy in a coordinated global effort swap lines may simply not be enough to fill the vacuum created by anxiety that has fuelled markets through the last two weeks.

We anticipate the NZD will remain under pressure against the majority of major counterpart with ongoing downside risks in play against the USD. That said, the Kiwi edged nearer parity with the AUD as the plunging oil price hammered Australia’s terms of trade outlook. Having touched 0.9988 the Kiwi seems poised to outpace its antipodean counterpart through the short term.

Key Movers

The US Dollar enjoyed strong gains through trade on Wednesday, surging higher as liquidity panic flattens risk appetite and prompts investors to buy back USD. Bloomberg’s dollar index jumped sharply, fuelled by heavy losses across key major counterparts. The Great British Pound plunged through 1.20, losing over 5% and touching intraday lows at 1.1526, while the Euro drove through 1.10, bottoming out at 1.0810 before edging marginally higher into this morning’s open.

Panic across financial markets has prompted a run on liquidity and investors are scrambling to buy back into the world’s base currency, liquidating all other asset classes for cash as the global economy grinds to a halt. The US dollar has been the main benefactor of such moves rallying 8% in the past 2 weeks as funding and cash dry up and investors looked to the world’s base currency for stability amid the glut of uncertainty. As market and investor anxiety continues to build, we anticipate recent runs will be extended as rational trading patterns fall by the wayside and fear governs broader market direction.

Expected Ranges

NZD/USD: 0.5480 - 0.5990 ▼

NZD/EUR: 0.5080 - 0.5350 ▼

GBP/NZD: 1.9920 - 2.0480 ▼

NZD/AUD: 0.9780 - 1.0120 ▲

NZD/CAD: 0.8250 - 0.8450 ▼