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NZD extends gains pushing through 0.59 as risk sentiment improves

NZD - New Zealand Dollar

The New Zealand dollar recovery gathered pace through trade on Thursday, jumping back through 0.59 to touch intraday highs at 0.5982. Fears across financial markets continued to fade as markets gain confidence in the measures being employed by central banks and government around the world. The record levels of stimulus and commitment to QE measures has emboldened investors and helped foster the current improvements in risk sentiment, key in driving the NZD recovery. Having advanced over 2% through trade on Thursday, the Kiwi has enjoyed a sustained upturn since touching decade lows and levels not seen since the GFC, with ample scope for the recovery to continue as normal trading patterns resume. While markets largely dismiss the abysmal macroeconomic indicators filtering through and look to reinstate fair value across currency markets following the liquidity crunch of last week, there is room for further NZD upside and a push back above 0.60 US cents. Attentions remain squarely affixed to the ongoing pandemic development and we remain cautious of a regression should we fail to contain the COVID-19 march across the world.

Key Movers

The US dollar retreated for a third consecutive session as risk sentiment continues to improve and markets look to correct the USD overshoot. With liquidity pressures easing, investors are unwinding USD shorts forcing the greenback lower against most major counterparts. While markets are largely ignoring dire macroeconomic indicators, yesterday's US jobless claims was keenly anticipated as a marker that could drive further stimulus measures. US unemployment filings rose at an unprecedented pace with more than 3 million Americans registering for unemployment, prompting investors to begin pricing in a need for additional fiscal support. With the US now surpassing China with the largest number of COVID-19 cases worldwide there are fears the angst across the country and economy extend well into the second half of 2020.

The euro jumped over 1%, pushing through 1.10 while the dollar slipped back below 110 Japanese yen. The Great British pound continued its recovery rallying nearly 2.55 and back through 1.20, touching 1.2174 while the Canadian dollar pushed back through 0.70 US cents.

While attentions remain squarely affixed to the unfolding coronavirus pandemic there is scope for further US softness as risk appetite improves. However, we expect the USD to remain largely well bid as the pall of uncertainty cast by COVID-19 and month /quarter end rebalancing drive demand for the worlds base currency.

Expected Ranges

NZD/USD: 0.5580 - 0.6030 ▲

NZD/EUR: 0.5280 - 0.5480 ▲

GBP/NZD: 1.9980 - 2.0730 ▲

NZD/AUD: 0.9780 - 0.9920 ▲

NZD/CAD: 0.8150 - 0.8480 ▲