Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools

Kiwi fails to hold onto gains above .60 as tumbling oil prices force shift in risk sentiment

NZD - New Zealand Dollar

The New Zealand Dollar tumbled through trade on Tuesday, giving up Monday’s gains and drifting back below 0.60 US cents. A risk off mood permeated the market as oil prices continued southward and attentions shifted toward the underlying economic impact created by the coronavirus lockdown. Losses across WTI oil futures for May began spilling into longer dated contracts as investors were forced to make a more detailed assessment of the current economics within the oil market. Production continues to outstrip demand with daily oil consumption falling by as much as 30million barrels a day since the coronavirus lockdown commenced and even with OPEC and non-OPEC oil producers committed to reduce production by 10 million + barrels a day from May 1 the pressures on storage capacities continues to increase. The dip in oil and oil futures forced a broader risk off correction as fears the collapse will spill over into other instruments increased. Further downward pressures emerged as global dairy prices fell again, with whole milk powders down 3.9% amid a slowdown in global demand. Having shifted below 0.5940 to touch intraday lows at 0.5933 the NZD opens marginally higher this morning currently buying 0.5963 US cents.

Attentions today remain attached to broader risk sentiment as markets and investors continue to absorb the slew of dire macroeconomic data sets that are beginning to flood the market and the realities of the upcoming recession take hold.

Key Movers

The US dollar touched a two-week high on Tuesday, buoyed by a shift in risk sentiment that prompted an uptick in demand for haven assets. The Dollar index jumped through 100 to touch 100.48 before edging lower and settling around 100.20 after oil prices spiralled ever lower and broader macroeconomic indicators offered a sobering reminder of the economic hardships ahead.

The Great British Pound was the days big looser down over 1% and touching intraday lows at 1.2250. Despite the UK’s COVID19 mortality and transmission rates plateauing it remains in the grips of the health crisis with little end to the current lockdown measures in sight. UK businesses are coming under mounting pressure and as chatter again returns to the possibility of a hard Brexit their ability to bounce out of this crisis may be hampered further if the UK leaves the EU without a firm trade deal in place. Reports suggest the UK won’t ask for an extension to the current divorce date and will reject one if offered by the EU casting an ever greater pall over the future economic outlook.

The Euro found support on Tuesday as Italy agreed to work with other EU members in formatting guidelines for access to new ESM credit lines. Bouncing off 1.0815 the Euro touched intraday highs at 1.0880 while enjoying strong gains against commodity led crosses. AUD/EUR fell below 0.58 while NZD/EUR broke 0.55 to touch 0.5476.

Expected Ranges

NZD/USD: 0.5880 - 0.6020 ▼

NZD/EUR: 0.5420 - 0.5580 ▼

GBP/NZD: 2.0480 - 2.0820 ▼

NZD/AUD: 0.9415 - 0.9540 ▼

NZD/CAD: 0.8380 - 0.8550 ▼