Kiwi stumbles as risk sentiment sours

Daily Currency Update

NZD - New Zealand Dollar

The New Zealand dollar hit a fresh three-week low on Friday, down 0.57% to open this morning at 0.7032. It wasn't a one-way decline throughout intra-day trade however with some promising price action seeing the Kiwi hit 0.7086 earlier in the day. Nevertheless, it wasn't to last as the Americans bid up the greenback late on Friday which saw the Kiwi tumble.

Friday was a quiet day on the economic calendar with very little to drive direction. Nevertheless, the flight to safety was well and truly on with both the NASDAQ and the S&P500 falling 0.91% throughout the day. The turn in risk-sentiment and the rise in 10-year US-Treasury Bond yields by 3-basis points forced the US-Dollar index higher by 0.41% and subsequently, the Kiwi lower. Domestically, the Kiwi enjoyed a better-than-expected rise in Q2 GDP, hitting 2.8% q/q growth on Thursday. Initially, the Kiwi had a sugar rush movement higher before slowly being whittled lower as risk sentiment turned. Adding fuel to the fire is fears of economic contagion and slower growth from China as the China Evergrande Group continues to grapple with its debt crisis.

Moving into a new week all eyes will be on the FOMC statement in the US, slated for Thursday.