NZD/USD: Struggling to build on break above 0.68 amid risk-off in equities

  • Kiwi’s recovery from lows below 0.68 seen yesterday is struggling to gather traction amid losses in the Asian equities.
  • The pair may take a beating in Europe if German GDP prints below estimates, bolstering recession fears and leading to deeper losses in equities.

NZD/USD is currently trading at 0.6806, having clocked a high of 0.6817 earlier today.

The recovery from the previous day’s low of 0.6797 looks to be running out of steam, possibly due to risk aversion in the Asian equities.

At press time, Japan’s Nikkei is reporting a 0.43 percent drop and the Shanghai Composite is down 0.27 percent. Stocks in Hong Kong and South Korea are also flashing red. Shares in Australia and New Zealand, however, are trading in the green, likely due to the rising odds of interest rate cuts in both nations.

Both RBNZ and RBA have recently shifted interest rate guidance to neutral by putting rate cuts back on the table. Therefore, the path of least resistance for the NZD and the AUD is to the downside.

NZD/USD could fall back under the previous day’s low of 0.6797 if the equities remain risk-averse. The losses could be much deeper if Germany’s fourth-quarter GDP, scheduled for release at 07:0 GMT, prints below estimates, bolstering fears of a recession in the Eurozone’s largest economy.

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