Kiwi closes at three-week low as risk aversion takes hold

Daily Currency Update

The New Zealand Dollar finds itself the recipient of the dubious title of worst performing major currency last Friday, succumbing to a 1.16% decline. Opening this morning at 0.5931, the Kiwi unfortunately felt the brunt of the increased risk aversion throughout last week to close at a three-week low.
Friday was a relatively quiet day on the domestic economic calendar with little to digest at home. Nevertheless, COVID-19 headlines continued to dominate currency markets with the Kiwi in particular susceptible to shifts in risk sentiments. Initially, reports of increased cases in countries that have relaxed lockdown restrictions undermined Kiwi support but this was soon exacerbated by reports on the growing tensions between the US and China. The US Commerce Department announced on Friday that it was tightening restrictions on foreign companies supplying Huawei with semi-conductors. China responded rapidly, announcing that they were prepared to add companies such as Apple and Qualcomm to their ‘unreliable entity list’ subjecting them to new restrictions. Australia added fuel to the fire as well by suggesting an inquiry into the Coronavirus pandemic might be a prudent course of action. China unimpressed with the request, has taken a hard-line approach with Australia, banning beef imports from four Australian facilities as well as threatening 80% tariffs on barley. Geo-political stoushes aside, economic data also continued to be of concern on Friday with US retail sales slumping by 16.4% US Industrial Production falling to 36.1. Overall, with COVID-19 far from over, growing geo-political concerns and shaky domestic data, risk sentiment took an about turn last week which saw the Kiwi succumb to a three week low.
Moving into a new week, the Kiwi continues to take cues from COVID-19 and trade tension headlines.