Daily Currency Update

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Kiwi advances as promise of easing restrictions bolsters risk appetite

NZD - New Zealand Dollar

The New Zealand dollar advanced through trade on Thursday recouping Wednesday’s losses and pushing back toward 0.61 US cents. Stronger than anticipated Chinese export data and a subsequent bounce in the CNH helped drag the kiwi higher while a bounce in equities and a broad based USD sell off ahead of US non-farm payroll data aided in consolidating gains.

The Kiwi also found support in reports New Zealand is preparing to ease COVID 19 restrictions further this coming week. Prime Minister Arden outlined what the economy will look like under level 2 restrictions, confirming that much of the economy will now be able to re-open assuming social distancing standards are adhered too. With New Zealand well ahead of most developed economies in battling and containing the coronavirus the NZD looks somewhat attractive given domestic investment opportunities may be more readily available in the immediate term.

Watch resistance on moves above 0.6130 and approaching 0.6170 while supports at 0.60 and 0.5920 remain intact for now.

Key Movers

The US Dollar retreated through trade on Thursday as investors appeared to correct positions and capitalise on early week gains before today’s Non-Farm payroll print. Analysts are anticipating labour market data will show an unprecedented number of job losses throughout April after another 3.1 million Americans filed for unemployment last week. Conservative estimates suggest over 21 million jobs have been removed from the economy in April, a staggering and historic labour market correction. The blinding speed to which not just the US economy but the global economy has come to a halt perhaps cannot be appreciated until broader context is provided. In the 10 years following the GFC the US economy added approximately 20 million new employment opportunities, a sobering reminder that the recovery and reallocation of labour will likely be a slow and languid process. Having given up two-week highs the dollar index lost three tenths of a percent having suffered losses against the Swiss Franc, AUD, CAD and NZD while the Euro bounced off two week lows to push higher on the day. The single currency has come under sustained pressure this week amid concerns the ECB’s stimulus scheme may be hamstrung following the German Constitutional Courts ruling earlier this week.

The Great British Pound touched a 16-day low despite a brief bounce following the Bank Of England policy announcement. The Monetary Policy Committee elected to maintain its current policy setting re-iterating it remains poised to take further action to counter the coronavirus pandemic. Sterling crept through 1.24 to touch 1.2418 before steadily falling as coronavirus and Brexit fears again outweighed near term demand forcing the pound through 1.23 to 1.2274.

Attentions shift to US non-farm payroll numbers as the headline item dominating the days agenda. With unemployment tipped to reach 16% a bigger hit will likely prompt an immediate risk off move and prompt a correction into the weekly close.

Expected Ranges

NZD/USD: 0.5920 - 0.6170 ▲

NZD/EUR: 0.5550 - 0.5720 ▲

GBP/NZD: 2.0080 - 2.0650 ▼

NZD/AUD: 0.9330 - 0.9450 ▼

NZD/CAD: 0.8450 - 0.8650 ▼