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Kiwi opens at 0.6550 after challenging week

NZD - New Zealand Dollar

Financial markets were quiet to round out a tough week for the New Zealand Dollar. The Kiwi fell over 1% last week against the greenback, making it the worst performer among its G10 peers. This sees the NZD/USD pair open this morning around the 0.6550 handle heading into this week with the AUD/NZD up to 1.0960, its highest level since October 2018.

The weakness in the Kiwi is largely attributable to the dovish monetary policy statement from the Reserve Bank of New Zealand which heightened market expectations of a negative cash rate for next year. In addition to this, the government announcement on Friday that the country will remain in lockdown until the 26th of August, with Auckland under an even more stringent lockdown is weighing on the currency.

It is shaping up to be a big week for the Kiwi this week with the prime minister set to speak this morning on whether the election will be able to proceed as planned on September 19th or whether it will be delayed. Offshore we have RBA minutes due Tuesday, FOMC minutes Thursday morning and a raft of inflation numbers for Europe on Friday.

Key Movers

Taking a global look at markets, US-China trade tensions continue to grab headlines however are having a more muted impact on markets. This weekend saw President Trump put a 90 day deadline on the sale of Chinese owned video sharing app ‘Tik Tok’ as US buyers which reportedly include Microsoft, have strong interest in acquiring it. Risk assets were little moved.

Concerns over a second wave of COVID-19 in Europe saw European equity markets retreat nearly 2% on Friday. Economic Data out of the US was much better than expected with retail sales in particular having a bounce back in the month of July to reach pre-covid levels.

Expected Ranges

NZD/USD: 0.6500 - 0.6575 ▼

NZD/EUR: 0.5500- 0.5580 ▼

GBP/NZD: 1.9760 – 2.0100 ▲

AUD/NZD: 1.0915 - 1.1000 ▲

NZD/CAD: 0.8620 - 0.8700 ▼