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New Zealand Dollar failed to hold on to Friday's bounce and succumbs to further selling

NZD - New Zealand Dollar


The New Zealand when valued against its US counterpart slumped to 11-year lows last week under 55c as panic set into markets which caused a heavy sell-off. Friday saw the NZD/USD pair stage comeback from intraday lows of 0.5606 touching a high of 0.5881 as the Fed announced its decision to expand the currency swap line to nine more countries which helped ease market concerns about tightening liquidity and trigged a round of USD selling. Once again these moves are short-lived as worries about the economic fallout from the coronavirus pandemic extended some support to the greenback's status as the global reserve currency.

There are no scheduled data releases today, key stats are limited to February’s Trade figures on Wednesday which are likely to be impacted with China’s shutdown. Macro-economics aside, we can again expect volatility as news updates on the spread of the coronavirus remain to be the key driver. On the technical front, the Kiwi is currently trading at 0.5700, we see 0.5600 as near-term support followed by 0.5470. On the upside, expect to see resistance on moves approaching 0.5900.

Key Movers

The USD Index traded at a 3-year high last week with the greenback benefitting from above-average interest as huge deleveraging is leading to a run into the USD and the currency is in high demand. In times of trouble, companies, banks and investors want to hold dollars, it’s the world’s reserve currency and considered the safest. Investors have been selling financial assets all over the world which has been fuelling demand for the USD and sending other currencies lower, much lower. By the Fed expanding its swap lines and adding lines to more central banks so that whatever institutions need Dollar funding can have access to it is aiming to alleviate pressure on currency markets. The goal is to ease the panic for dollars and allow foreign-exchange markets to keep operating normally.

Global markets also shifted lower, the S&P500 has lost over 30% in the past month, oil and commodity prices were under further pressure as too were bond yields. In the UK, a further GBP 30bn was announced as a stimulus to support the employed, self-employed and companies that would feel the pinch.

Expected Ranges

NZD/USD: 0.5480 - 0.5910 ▼

NZD/EUR: 0.5100 - 0.5560 ▼

GBP/NZD: 1.9850 - 2.0800 ▲

NZD/AUD: 0.9690 - 1.0040 ▼

NZD/CAD: 0.8000 - 0.8400 ▼