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NZD falls to December lows on spread of new Covid variant

Friday 9 July, 2021

Daily Currency Update

NZD - New Zealand DollarDespite the USD index falling 0.3% overnight, the New Zealand dollar fell against the worlds reserve currency as the spread of the new Covid variant spooked markets and their outlook for the economic recovery. NZD/USD fell from 0.6985 to 0.6935. It was a similar story for the AUD, which fell from 0.7460 throughout trade to around 0.7418 to print fresh lows not seen since December 2020. With the NZD having a worse session than the AUD, the AUD/NZD cross rate rose from Wednesday’s one-month lows to once again trade above 1.0700. The risk off move overnight has been attributed to investor caution on the back of a possible slowdown in economic growth and the rising spread of the new delta variant. With Japan announcing a state of emergency and infection rates increasing in countries with high vaccination rates, the outlook for a global reopening is dimming. Looking forward to the session ahead, the RBNZ are set to announce bond buying plans for the next week at 12pm. Markets are expecting the pace to be kept at $200m and market action is expected to be muted. There is also some important CPI and PPI data due out of China as well as Canadian employment data later in the session. Given recent moves, AUD/USD supports have been broken with the next level on the downside seen at 0.6025.

Key Movers

As we alluded to above, the risk off moves overnight are our market mover for today. In typical risk off fashion, we saw the safe haven JPY and CHF both higher across the board, as investors flocked to safety on delta variant and global growth concerns. USD/JPY fell back below the key 110.00 handle to trade at 109.50, with commodity currencies feeling the brunt of sharp falls across the board. Equity markets also fell across the board. Asia’s Hang Seng fell 2.9%, Europe’s EuroStoxx 600 was off 1.7% and the S&P500 fell 1.6% at the session open before recovering slightly.

Expected Ranges

  • NZD/USD: 0.6900 - 0.7000 ▼
  • NZD/EUR: 0.5800 - 0.5920 ▼
  • GBP/NZD: 1.9750 - 1.9950 ▲
  • AUD/NZD: 1.0650 - 1.0740 ▲
  • NZD/CAD: 0.8650 - 0.8764 ▼