NZ dollar declines amid rising Covid-19 infections

The kiwi was trading at 64.17 US cents at 5pm. Photo / Getty Images

The New Zealand dollar fell as surging Covid-19 infections everywhere from California and Texas to Brazil and India overtook investors' best attempts to ignore the bad news to focus on economic recovery.

The kiwi was trading at 64.17 US cents at 5pm in Wellington from 64.60 cents at the same time yesterday. The trade-weighted index was at 71.15 from 71.35.

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The US as a whole recorded its second-worst day for new infections at 38,386, behind only April 24's 39,072 total, while Brazil reported 40,995 new cases.

With Texas recording more than 6,000 new cases on Wednesday, Apple shut another seven stores in that state, bringing its total reclosures across the US to 18.

And New York, New Jersey and Connecticut, previously the epicentre of the pandemic in the US, are now requiring interstate visitors to quarantine for 14 days. New York reported 719 new cases on Wednesday.

As these developments pierced the market's previous determined optimism, the broad measure of US stocks, the S&P 500 Index, fell 2.6 per cent on Wednesday and the futures were down nearly 0.5 per cent late afternoon in Wellington.

Nevertheless, the S&P 500 is still nearly 30 per cent higher than its low-point in March when the reality of the pandemic and its economic consequences became apparent.

"That's the reality check that the market had last night," said Martin Rudings, an adviser at OMF. "I think this deserves a bit more downside for equities."

And if that happens, the kiwi is likely to test support at 63.70 US cents, he said.

Bad as the coronavirus numbers are, the reality is likely even worse. "The way these numbers are reported globally, you would have to say they're a little light," Rudings said.

NZ reported another three infections today, all travellers from other countries, bringing our total to 1,169, with deaths unchanged at 22. Nearly half a million people worldwide are known to have died from Covid-19 since January with nearly 125,000 of them in the US.

The kiwi dollar was trading at 93.48 Australian cents from 93.07 at 5pm yesterday, at 51.69 British pence from 51.62 pence, at 57.04 euro cents from 57.11 cents, at 68.76 yen from 68.84 yen and at 4.5420 Chinese yuan from 4.5664 yuan.

The bid price on the two-year swap was at 0.1875 per cent from 0.1975 per cent, while the 10-year swap was at 0.7225 per cent from 0.7500 per cent yesterday.