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Kiwi edges lower on global fears of a second-wave

NZD - New Zealand Dollar

The New Zealand Dollar extended its losses into a second day on Friday, falling 0.25% to approach 2-week lows of 0.6375. Opening this morning at 0.6405, the Kiwi succumbed to broad-based US Dollar strength.

Markets continued to trade on global risk sentiment with currency markets noticeably souring as the day progressed. Spurred on by fears of a second wave of COVID-19 infections, particularly in China, the US and Brazil, markets swiftly lost their appetite for risk assets and commodity linked currencies such as the Kiwi. With this latest dose of uncertainty, the US Dollar strengthened across the board to force the Kiwi into bear territory.

Moving into a new week, all eyes will be on the RBNZ and their rate decision on Wednesday. While tipped to be a hold at 0.25%, their comments on the economy or forward guidance may have repercussions for the NZ Dollar.

Key Movers

The US Dollar Index (USDXY) extended its recent winning streak into a fourth day, appreciating 0.25% to take it to its highest point since early June. Opening this morning at 97.66 the Greenback, a safe-haven currency, benefited from global risk sentiment souring in the face of a potential second wave of COVID-19 infections.

Across the pond, the Great British Pound hit a fresh three-week low to open this morning at 1.2348. Falling around 0.59% on Friday, the Sterling continues to remain under pressure after the Bank of England announced its intent to increase its bond-buying program by £100 billion. The result comes despite a better than expected Retail Sales reading and reports that Brexit negotiations are not nearly as bad as once thought. Nevertheless, a resurgent US Dollar, coupled with further monetary policy easing was too much for the Pound to overcome.

Expected Ranges

NZD/AUD: 0.9343 - 0.9422 ▲

NZD/CAD: 0.8661 - 0.8757 ▲

NZD/EUR: 0.5672 - 0.5766 ▲

GBP/NZD: 1.9217 - 1.9410 ▼

NZD/USD: 0.6339 - 0.6441 ▲