NZ dollar range-bound amid souring mood in equities markets

The kiwi was trading at 64.25 US cents at 5pm. Photo / 123RF

The New Zealand dollar was range-bound despite a souring mood in global equities markets as Covid-19 infections passed 10 million and deaths 500,000.

The kiwi was trading at 64.25 US cents at 5pm in Wellington from 64.23 cents in New York on Friday and 64.42 cents here at 5pm. The trade-weighted index was at 71.24 from 71.36.

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"There's still enormous uncertainty. The interesting thing is that even when equities markets were falling, the kiwi and the Aussie were holding their ground," said Mark Johnson, an adviser at OMF. He noted the US S&P 500 Index futures had been down the best part of a per cent earlier in the NZ day.

Major states including California, Texas and Florida have ordered bars to close again in the face of rising infection rates – the US as a whole has reported more than 40,000 infections a day for the past four days, exceeding the previous peak in April.

The key focus of the week will come in the early hours of Friday, NZ time, when the US non-farm payrolls data for June will be released – it has been brought forward because the US has a public holiday on Friday as the July 4 Independence Day falls on Saturday this year.

Surprise

The data last month was a shockingly pleasant surprise: the market had been expecting the loss of 8 million jobs in May due to the coronavirus crisis but instead the data showed 2.54 million jobs were gained. The unemployment rate also came in at a better-than-expected 13.3 per cent.

For June, economists are forecasting a gain of 3 million jobs and the unemployment rate falling to 12.5 per cent, Johnson said.

Also of interest, Federal Reserve chairman Jerome Powell and US Treasury Secretary Steven Mnuchin are scheduled to testify before the US House Financial Services Committee on Tuesday about the US government's response to the crisis.

"I still think the kiwi remains vulnerable to the downside," it's just a question of what the catalyst will be to push it lower, Johnson said.

The kiwi dollar was unchanged at 93.47 Australian cents from 5pm on Friday, at 51.96 British pence from 51.81 pence, at 57.16 euro cents from 57.38 cents, at 68.81 yen from 68.99 yen and at 4.5481 Chinese yuan from 4.5583 yuan.

The bid price on the two-year swap was at 0.1900 per cent from 0.1950 per cent, while the 10-year swap was at 0.7480 per cent from 0.7525 per cent on Friday.