Kiwi hones in on break above 0.65 US cents as risk on narrative continues

Key Movers

The US dollar retreated through trade on Wednesday, slipping to an 11-week low as investors continued to shed safe haven assets. Demand for risk continues to improve as markets the disconnect between fundamentals and direction continues. While macroeconomic indicators paint a dire picture, printing well below the line of contraction and expansion the trend line is beginning to point in the right direction, bolstering hopes that with ongoing easing of social distancing restrictions the global economy will rebound quicker than first anticipated.
The Euro enjoyed modest gains up six tenths of a percent to 1.1236. The shared currency has enjoyed strong gains since the EU commissions proposal for a 750 Euro recovery fund. The scheme, if agreed by all 27 member states would go beyond initial expectations and represents an incredibly important step forward for the Eurozone and EU project at a time when its very existence was being questioned. Having rallied 3% through the last 10 days the currency is well placed to take advantage of ongoing USD weakness.
The Japanese Yen was again the worst performing major unit falling another quarter percent against the Greenback as the move away from haven assets forces investors to unwind JPY positions.
Attentions today turn to the European Central Bank, wherein we expect they will announce extensions to its QE program, ramping up bond purchases as it attempts to steer the continent through the coronavirus crisis.