Daily Currency Update

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Kiwi struggles to extend gains despite broader USD downturn

NZD - New Zealand Dollar

The New Zealand dollar under-performed through trade on Tuesday, unable to capitalise on a broader risk on move and dip in the USD. A sharp decline in oil prices forced commodity currencies lower and saw the Kiwi flirt with a break back below 0.61 US cents. Having touched intraday highs at 0.6130 the NZD shifted lower in the early hours of the European session, touching 0.6066 before edging higher into this morning’s open. The NZD currently buys 0.6104 US cents, while falling below 0.95 against its antipodean counterpart. The AUD has enjoyed strong gains against the NZD after toying with a break toward parity as investors look beyond the coronavirus pandemic. Both New Zealand And Australia have largely controlled the outbreak of the disease, successfully suppressing the number of community transmitted cases to date. Markets believe the Australian economy is better placed to bounce back from the pandemic having lowered infection rates without going into full-scale lockdown.

Attentions remain squarely affixed to risk demand but Australian labour market data due Thursday will prove the first real insight into the depth and breadth of the economic impact and could foster a shift in the recent NZD/AUD downturn. We expect the NZD will remain well bid against the USD through the short term as the risk on environment continues to steer direction. However, as attentions turn to the looming global recession the vulnerability of the NZD in a low growth environment will likely be tested.

Key Movers

The US dollar fell through trade on Tuesday as markets extended the recent risk on move. The dollar has come under sustained pressure throughout the last fortnight as liquidity pressures ease and a softening bias steers direction. The Dollar index fell five tents of a percent, dipping below 0.99 as the Euro pushed back through 1.09 and again tested 1.10.
A sharp decline in oil prices forced commodity currencies lower. Brent Crude fell 9% as production quarrels between OPEC and non-OPEC countries continues, with Saudi Arabia promising to maintain its high level of production through April. The dip in oil prices forced the Canadian Dollar and Norwegian Kroner lower.

Attentions today turn to US core retail sales as a key marker in identifying the economic impacts of the coronavirus.

Expected Ranges

NZD/USD: 0.5980 - 0.6180 ▲

NZD/EUR: 0.5430 - 0.5610 ▼

GBP/NZD: 2.0470 - 2.1030 ▲

NZD/AUD: 0.9410 - 0.9630 ▼

NZD/CAD: 0.8380 - 0.8510 ▲