The NZD is on the downside once again, as after it peaked at 0.63950 cents against the US Dollar, it then managed to plummet down almost 1% to 0.63630 in the course of just one hour. During the rest of the day, it reached a low of 0.63530 twice before steadying off slightly.
This is a three-month low for the NZ Dollar, and comes in spite of the rate cut in China.
China has cut their one-year Loan Prime Rate (LPR) to 4.05% from 4.15%, and the five-year rate to 4.75% from 4.8%. This lowering of the lending rate is to help companies weather the economic storm that the coronavirus is causing, in anticipation of a slowdown in the Chinese economy. While this cut was expected, the market still reacted negatively as analysts felt that these changes could only do so much to cushion the blow.
As expected, the AUD and NZD were the currencies most affected. As well as being volatile currencies to begin with, both are very sensitive to changes made in the Chinese market, due to their close economic relationship with the second largest economy in the world. However, AUD was hit significantly higher, dropping to a new 11-year low.
In addition to this, the USD is continuing to strengthen at the same time. Investors are continuing to take their money towards safe havens such as it and gold, which rose to a fresh 7 year high, as was discussed in yesterday’s review. In comparison, the highly volatile nature of the Aussie and Kiwi dollars make them very unattractive in the current market sentiment.
Philip van den Berg at BlackBull Markets gave a succinct summary on the movement of the Kiwi Dollar:
“With Kiwi pushing to the downside we could see it break the support at 0.63290 and possibly 0.62800 to fill the monthly wick at 0.60490.”
For a more detailed analysis from Philip, watch our video here, or on Instagram and Twitter at blackbull_markets and @blackbullforex, respectively.
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