NZD - New Zealand Dollar
Having traded sideways for much of the domestic session the NZD crept higher overnight, pushing through resistance at 0.6450 to touch intraday highs at 0.6488 following reports of a possible coronavirus vaccine. Pfizer and BioNtech have reportedly produced a vaccine that after two inoculations significantly increases the level of antibodies in patients and shows promising signs in neutralizing the virus. Investors jumped on the news fostering a late on risk rally with currencies dragged higher by a sustained uptick in equities. The S&P500 advanced a further half percent now up nearly 2% for the week as added support for risk came on the back of improved US manufacturing data.
The NZD outperformed most major counterparts yet remains vulnerable to a broader risk off move. As coronavirus headlines continue to dominate direction and the rate of infection within the US, Latin and South America continuing to grow at an alarming rate the threat of a sustained period of lockdown and lackluster economic activity continues to cloud the outlook. We expect the NZD to remain largely range bound through the short to medium term, struggling on moves approaching and above 0.65/0.66.
The Great British Pound was again the days top performer, advancing against major counterparts and extending Tuesday’s rally to push above 1.24 and 1.2450. While there were no obvious triggers for Sterling’s sustained uptick, the risk on run created by improved US macroeconomic data and the promise of a COVID19 vaccine before the end of the year have helped drive the currency higher. The Pound was one the worst performing major units throughout June plunging almost 5% and as such appears relatively cheap. There is a sense that the early quarter uptick is merely a correction in last months sell off and investors taking advantage of a reasonable buying opportunity.
Safe havens struggled again as the USD and broader dollar index both fell, while the JPY was forced lower on the back of the late risk on move. Currency ranges have become much more constrained following the volatility of March, April and May with fluctuations amid set ranges governed by the eb and flow of risk demand. With contrasting forces pulling in either direction the question is now which side will win out.
0.6380 - 0.6520 ▲NZD/EUR:
0.5710 - 0.5790 ▲GBP/NZD:
1.8980 - 1.8420 ▲NZD/AUD:
0.9330 - 0.9420 ▲NZD/CAD:
0.8730 - 0.8820 ▲