Daily Currency Update
NZD - New Zealand DollarThe New Zealand dollar opens below 0.69 US cents this morning amid COVID-19 uncertainty and a stronger USD. The recent outbreak has risen to 10 with no new information available as to the source of the outbreak. With case numbers expected to rise and lockdown potentially extended beyond 7 days, the RBNZ opted to defer a much-anticipated rate adjustment. The NZD plunged in the immediate aftermath marking fresh lows at 0.6870 before recouping losses as markets absorbed the accompanying statement and commentary. The COVID-19 outbreak clearly prompted a last-minute re-think but the RBNZ was careful to highlight it remains committed to reducing monetary stimulus. “Our central projection implied monetary stimulus should be reduced to ensure the MPC meets its objective, however we have elected to keep the OCR unchanged given the uncertainty caused by this lockdown”. With expectations the RBNZ will begin raising rates from next month the NZD rallied to test a break above 0.6950 before a steady overnight decline amid broader US strength. The overnight sell-off and US strength highlight just how vulnerable the NZD is to global forces. Having slipped back below 0.69 the NZD currently buys 0.6980 US cents.
Key Movers
The US dollar maintained the week's upward momentum through Wednesday advancing against the majority of major counterparts including the Japanese yen amid a definitive risk-off push. The Dollar index touched four-week highs as the euro was forced toward its lowest level in 9 months, slipping below 1.17 to mark a fresh daily low at 1.1695. Having fallen steeply this week we do expect some resistance to further declines at this handle. Key technical supports at 1.1695 remain intact for now and we anticipate investors will look to take a beat to reassess the recent sell-off. The Great British pound was one of the few currencies to outperform, bouncing off lows at 1.3735 to touch intraday highs at 1.3780. An uptick in CPI inflation numbers helped fuel expectations the Bank of England will be driven to normalise monetary policy in the near-medium term, affording the sterling some relief from the weeks earlier decline. Our attentions remain with global forces as US jobless claims and the Philadelphia Fed Business Index dominate the macroeconomic ticket.
Expected Ranges
- NZD/EUR: 0.5850 - 0.5930 ▼
- GBP/NZD: 1.9790 - 2.0120 ▲
- NZD/AUD: 0.9470 - 0.9560 ▼
- NZD/CAD: 0.8650 - 0.8770 ▼