Daily Currency Update

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Kiwi unable to sustain gains as risk appetite sours

NZD - New Zealand Dollar

The New Zealand dollar gave up the weeks early gains drifting back below 0.69 US cents amid a broader risk asset sell off. Commodity and emerging currencies, equities and stocks all underperformed through Thursday as optimism surrounding COVID-19 vaccine hopes faded and the markets focus was drawn back to short term economic challenges. While there are hopes a vaccine will be available by year-end it is unlikely there will be enough supply to protect the broader community until the latter half of 2021. With the US recording 144,000 new coronavirus infections, the biggest daily number since the outbreak began, and a sharp uptick in hospitalisations the realities of the current environment forced investors back toward haven assets.

The NZD drifted back below 0.6850 and currently buys 0.6840 US cents. With little of note on the macroeconomic docket for the day we expect the risk narrative will continue to drive direction.

Key Movers

The Euro outperformed overnight, extending back beyond 1.18 despite a contraction in industrial production. A broader risk asset sell off appears to have helped the single currency as investors chase the world’s most liquid currency pair. The US dollar index was largely steady on the day with gains against risk assets offset by the dip against the Euro. The Great British Pound was the day's worst performer down almost 1% following a weak Q3 GDP print. While data was largely in line with expectations the UK economy has been devastated by COVID-19 and is still some 10% softer than before the pandemic. With new nationwide restrictions now in play as daily case numbers grow at an exponential rate there is little hope for a Q4 recovery. Sterling holds onto gains above 1.30 and currently buys 1.3118. Attentions today remain with the broader risk narrative as markets continue to set aside fundamentals and macroeconomic data sets.

Expected Ranges

NZD/USD: 0.6780 - 0.6910 ▼

NZD/EUR: 0.5740 - 0.5680 ▼

GBP/NZD: 1.9020 - 1.9280 ▼

NZD/AUD: 0.9380 - 0.9510 ▲

NZD/CAD: 0.8920 - 0.9050 ▲