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Kiwi remains under pressure despite small bounce back on Friday

NZD - New Zealand Dollar

The New Zealand Dollar headed into the weekly close in a relatively favourable condition, bouncing back 0.3% on Friday to open this morning at 0.6663 against the USD. Despite the recovery on Friday, the Kiwi was ultimately one of the worst performers of the week, shedding 0.8%.

The Kiwi continued to draw direction from global risk sentiment which bounced from risk on to risk off and then back to risk on last week. Initially the Greenback took center stage and strengthened across the board. Ultimately though, the European Central Banks commentary on Thursday supported risk assets which saw the Kiwi bounce back to some degree although it struggled to regain all its lost ground. Undermining the recovery in the Kiwi however, was some second-tier domestic data released on Friday that illustrated the economy took a hit in August. PMI fell to 50.7 in August from 59 the previous month and Auckland job ads fell 11%. Similarly, adds on SEEK fell 3.1% in August. At this point, this Thursdays GDP data looks to be a sobering contraction for the NZ economy.

Moving into a new week, the Kiwi again finds itself with a scarce economic calendar early on although there will be a busy Thursday with Australian unemployment, NZ GDP and a US FOMC statement to digest. On the COVID-19 front, Prime Minister Ardern will speak today on whether the country will change current COVID-19 alert levels across the country.

Key Movers

While the Aussie and the Kiwi were the best performers on Friday, the Euro also had a good showing, rising 0.25% against the Greenback after also succumbing to USD strength earlier in the week. Closing in the green for the sixth continuous week, the Euro benefited from the European Central Banks lack of concern for the strengthening Euro with ECB President Lagarde stating that the ECB note the stronger single currency but currently don’t have any policy to address it.

Across the Channel, the Great British Pound continued its poor run despite a slight bounce back that was short lived. Opening this morning at 1.2793, the Pound has shed 500 pips against the USD over the course of last week as Brexit concerns continue to weigh on the Sterling. With the risk of a no-deal Brexit continuing to climb as December approaches and a clear lack of consensus between the EU and the UK, the Sterling is set to remain under pressure.

Expected Ranges

NZD/AUD: 0.9103 - 0.9210 ▼

NZD/CAD: 0.8746 - 0.8851 ▲

NZD/EUR: 0.5577 - 0.5683 ▼

GBP/NZD: 1.9097 - 1.9288 ▼

NZD/USD: 0.6614 - 0.6721 ▲