The New Zealand dollar continues to ride higher, taking the top spot this week against the major currencies. It’s likely the recent shift away from negative rate speculation in New Zealand may have been supportive, but net positive updates from New Zealand and counter currency weakness were likely contributors to the gains as well.
New Zealand Headlines and Economic data
On top of the positive PMI update from New Zealand above, Kiwi bulls likely got some help from broad risk sentiment flows. Traders were feeling positive during the Monday session after news hit the wires of another positive COVID-19 vaccine trial outcome (Moderna says preliminary trial data shows its coronavirus vaccine is more than 94% effective). The risk rally seems to have been limited, likely as traders remembered that cases were rapidly rising and mandatory lockdowns were quickly coming from governments across the U.S. (much of California ordered back into lockdown) and Europe (Germany’s Merkel pushes stricter COVID measures).
Traders shifted negative in risk sentiment during the Tuesday session, likely the driver for the reversal in the Kiwi’s gains from the Monday session. Focus seems to have changed from positive vaccine updates to rising virus restrictions throughout the U.S. and Europe, and concerns of a no-deal Brexit may have been a factor as well.
The Kiwi moved broadly lower during the Asia and morning London sessions on Thursday, likely on the continued lean in global risk sentiment towards negative. This was support on the session by fresh headlines of Brexit uncertainty (Brexit Talks Suspended After Negotiator Catches Covid-19), and then later at the end of the U.S. session when news popped up that U.S. Treasury Secretary Mnuchin denied the extension of Fed aid programs