NZD, AUD Claw Back Up Amid Weakening US Dollar

by Mar 26, 2020Market Reviews

NZD, AUD Claw Back Up Amid Weakening US Dollar


The New Zealand Dollar is fighting it’s way back up as the country enters it’s first official day of nationwide lockdown. It posted a 0.67% gain for the trading day, up to 0.58390 cents against the US Dollar. Just a week ago the NZD had dropped to 0.56, and looked ready to hit the 55 cent mark, as news broke of Air New Zealand’s layoffs. 

Similar movement can be seen in the AUD, with a meek recovery of 0.47% up to 0.59820 cents. Both currencies have had very similar patterns over the last month, having fallen sharply since the start of the month, and only now starting to recover in the last few days. Both currencies have suffered heavily since the outbreak of the coronavirus epidemic, as they are seen as high risk currencies, and for good reason, given their trading connections to China. They have also been weakened by the strength of the US Dollar, which investors flocked to as a safe haven. 

The lockdown, which began on Thursday 26 March, is level 4 of the New Zealand government’s strategy to combat COVID-19, the highest level. It involves the shutdown of all non-essential businesses, and the strict restriction of all travel. Citizens are told to stay at home and limit contact with others at all costs. As part of this lockdown, Prime Minister Jacinda Ardern also declared a state of emergency across the entire country on Wednesday, as part of the drastic measures to contain the spread of the virus. While the level 4 measures were originally designed for when the virus could no longer be controlled in the country, the government decided to preemptively enter this stage after 36 new cases were confirmed in one day, in order to contain it as much as possible. 

The uplift of these currencies can be attributed to the slightly improving global market sentiment, as several countries have all pledged massive and unprecedented amounts of economic stimulus. In the US, the $2 trillion coronavirus bill was passed unanimously in the Senate, after the Democrats and Republicans finally reached an agreement over its contents.

It can also be attributed to the halting momentum of the US Dollar. The Dollar Index hit its peak at 102.87 points before coming back down, following 3 year highs. Last week’s rise in the Dollar was mostly attributed to the need for liquid cash as the markets crashed and investors pulled out, as well as to fund their margins. The Dollar Index is currently trading just above 100 points. 

The markets are also bracing for news on US jobless data, as it will inevitably be extremely negative. Economists are predicting anywhere from 1 million to 1.5 million jobs lost. More than 1 million Californians have already filed for unemployment as the state entered lockdown 6 days ago, as announced by Gavin Newsom, the governor of the state. He also announced yesterday that the restrictions would remain through Easter. 

For more content from us, check out our YouTube channel, where we are now streaming live every day from 10:00 GMT. We also post regular updates on our Instagram and Twitter.

Related Posts

What is technical analysis?

Technical analysis is a type of analysis derived purely from charts and the price movement of the security. The basis of technical analysis is that past price movement is a good indicator for future price movement. Technical analysis uses statistical trends such as trading volume and historical support / resistance levels to gauge the movement of the price in the future. This in contrast to fundamental analysis, which involves looking at a security from a financial and economic point of view.

read more

Black Bull Group Limited (trading name: BlackBull Markets) is a New Zealand registered and incorporated company (company number: 5463921). We are also registered with the Financial Services Provider Register (number: FSP403326).

Black Bull Group UK Limited is registered in United Kingdom, Company Number - 9556804. Payment clearing services provided by: BlackBull Group UK Limited (Company Number - 9556804) Address - 483 Green Lanes, London, Greater London, United Kingdom, N13 48S

Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.

Copyright © 2020 Black Bull Group Limited. All Rights Reserved.

Share This