Daily Currency Update
NZD - New Zealand DollarThe New Zealand dollar edged lower through trade on Wednesday testing supports at 0.65 and touching intraday lows at 0.6507. With little available on the domestic docket to drive direction the Kiwi remained at the mercy of broader risk trends. Demand for haven assets again strengthened through trade on Wednesday as market uncertainty as to the economic fallout of the coronavirus escalated again. Risks remain skewed to the downside as the nature of this virus and its possible total impact remain broadly unknown. Health authorities are still battling to understand the virus and until a clear picture emerges as to the ease of contagion and expected mortality rate. A break below 0.65 could prompt a move toward 0.6460 with upside gains capped at 0.6580.
Key Movers
The Federal Reserve held interest rates on hold through Wednesday, highlighting sustained moderate economic growth and strength across the job’s/labour market as the drivers behind the unanimous policy decision. The statement was little changed from that issued after the December policy meeting and was widely expected across the broader market prompting little change across broader currency markets. The Great British Pound remains poised near one-week lows ahead of the Bank of England’s policy decision. Despite a correction in rate cut expectations throughout the last week today’s rate announcement should inject some volatility into Sterling and a break outside recent ranges between 1.2950 and 1.3150. Currently markets are split with 50% of analyst pricing in no change while the other side have prepared for a cut. While recent macroeconomic indicators have shown some improvement there is certainly scope to support a interest rate adjustment, however with Britain’s divorce from the EU due to be finalised on Friday the Bank of England may want to leave some ammunition in the holster to combat any unknown economic fallout.
Expected Ranges
- NZD/USD: 0.6460 - 0.6580 ▲
- NZD/EUR: 0.5920 - 0.5980 ▼
- GBP/NZD: 1.9750 - 2.0050 ▲
- NZD/AUD: 0.9610 - 0.9710 ▲
- NZD/CAD: 0.8550 - 0.8680 ▲