Daily Currency Update

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Kiwi fails to extend beyond 0.67 as investors pull big bets

NZD - New Zealand Dollar

The New Zealand dollar drifted marginally lower on Monday, unable to extend last weeks upturn amid a risk off shift and US dollar rebound. Concerns for the growing number of COVID19 infections across Europe and failed US stimulus talks prompted investors to give up risk assets, driving a sell off across global equities and a spill over into currency markets. While stocks bore the brunt of the risk off shift the NZD retreated, giving up a push toward 0.67 to touch intraday lows at 0.6670. Having failed to extend beyond resistance we expect the New Zealand dollar will remain largely range bound as we move through the week and into next week’s US Presidential election. Polls suggest Biden has a comfortable lead in the race to the White House, however it is the race for the Senate is proving much closer. With US coronavirus aid talks breaking down again at the weekend the Democrats ability to wrest back control of the senate is crucial in determining the size and scale of any government relief in 2021. Watch the NZD trade between 0.6520 and 0.6730 into November 3rd.

Key Movers

The US dollar bucked last weeks downtrend and advanced through trade on Monday, emboldened by a risk off shift and push toward safe haven assets. Rising Covid19 infections across the US and Europe and failed US relief talks forced investors out of equities and growth currencies and into treasuries, the USD, CHF and JPY. Record numbers of new infections in France, Russia and the US have sent a shockwave through markets amid fears reinstated restrictions will bring the economic recovery to a grinding halt. While Oxford university and Astrazeneca, front runners in the race for a vaccine, reported promising immune responses in older patients, phase 3 trials are still weeks from completion with a vaccine unlikely to be ready before December. Attentions this week turn to Key US GDP data and an ECB policy update as markets attempt to understand the impact of sustained restrictions and official attempts to guide the global economy through the Pandemic. We expect the ECB will provide some further guidance on additional stimulus measures as it attempts to see Europe through this 2nd wave and lockdown. Watch currencies to maintain a relatively narrow bank as investors delay big bets until after next weeks Election.

Expected Ranges

NZD/USD: 0.6580 - 0.6730 ▼

NZD/EUR: 0.5620 - 0.5710 ▲

GBP/NZD: 1.9380 - 1.9680 ▼

NZD/AUD: 0.9330 - 0.9450 ▲

NZD/CAD: 0.8770 - 0.8850 ▲