NZD/USD rises to 0.6443 today, as the kiwi is experiencing a consolidation period following a strong recovery due to a virus relief which may have been premature, according to Patrick Bennett from CIBC Capital Markets.
Key quotes
“While New Zealand was much heralded for its efforts in combating the virus within the country, the recent week or so has seen an emergence of a second-round of infections – albeit in limited numbers and traced to returning overseas arrivals. Still, any prospect of second round infections stalling an incipient economic recovery, or forcing a return to more restrictive rules, would be detrimental.”
“NZD/USD is now trading around 0.6450, levels of Sept-Dec of last year, and though the outlook for the economy is being backstopped by strong monetary and fiscal support, which should be supportive for assets and the NZD some risk premium from those levels given current uncertainty is appropriate. A weaker USD overall will be supportive for NZD/USD, though we do not see the market eclipsing highs around the New Year of 0.6750 in an easy manner.”
“A drying up of tourism and threats to inward education and the unknown of when those will return to previous levels suggest caution. We expect NZD to be a slight underperformer against the AUD.”
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