NZ dollar treads water amid Covid developments

The kiwi was trading at 66.35 US cents at 5pm. Photo / 123RF

The New Zealand dollar was little changed from its close in New York on Friday as the market eyed coronavirus developments and the impasse in the United States congress on passing a new economic support package.

The kiwi was trading at 66.35 US cents at 5pm in Wellington from 66.29 cents in New York on Friday but down from 67.05 locally at 5pm on Friday, while the trade-weighted index was at 72.13 from 72.57 at 5pm on Friday.

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California became the worst affected US state last week and has more than half a million people infected with Covid-19 while, closer to home, the Australian state of Victoria has gone into a stricter form of lockdown including an 8pm to 5am curfew.

Victoria recorded another 671 cases and 7 deaths on Sunday and is expected to announce more than 400 cases today. It is obvious that the state is experiencing community spread while the only NZ cases for weeks have been returning travellers who all go into a mandatory two weeks of quarantine on arrival.

NZ Prime Minister Jacinda Ardern has said a trans-Tasman bubble between Australia and New Zealand won't be possible until Australia has had 28 consecutive days with no community transmission.

Imre Speizer, currency strategist at Westpac, said a bank holiday in Australia today has kept trading quiet.

In the US, representatives of the White House and House of Representatives Speaker Nancy Pelosi have told Sunday television shows that they are still far apart on a deal after special relief measures, including protection from eviction for tenants and an additional US$600 ($903.71) per week unemployment benefit, expired last week.

"They always go down to the wire but when it gets to the wire, they usually agree," Speizer said.

The lack of a deal, along with the alarmingly high rate of infections, risks derailing the US economic recovery.

Tensions between the US and China are another factor impacting market sentiment with US President Donald Trump promising to ban the China-owned video messaging app TikTok in the US.

The NZ dollar was trading at 92.94 Australian cents from 92.83 cents at 5pm on Friday, at 70.23 yen from 69.93 yen, at 56.34 euro cents from 56.36 cents, 50.68 British pence from 51.07 pence, and 4.6285 Chinese yuan from 4.6852 yuan.

The bid-price on the two-year swap rate was at 0.1900 per cent from 0.1400 per cent on Friday while the 10-year swap was at 0.6250 per cent from 0.6100 per cent.