NZD/USD taking the flack as risk sours

NZD/USD is trading in early Asia at 0.6638 within a range of 0.6628 and 0.6719 from the overnight session.

It was a sour day for risk asset classes as sentiment fell over a cliff on Wednesday due to the concerns of the second wave of the around the spread of COVID-19 and subsequently renewed restrictions in Europe.  

Traders were awaiting the confirmation from France's Emanual Macron that the nation would be thrown back under lockdown for at least 4-weeks.

While the bird has little to do with such an event, nor is it related to the US elections, per see, it trades as a proxy to risk and what goes down in the commodity complex.

Commodities were pressured with a big drop in the price of oil which weighed heavily o the CRB index, still down some 2.6% at the time of writing. WTI is lower by over 4.20%.

''Equities have had a torrid night and that along with new lockdowns across many developed economies has brought on safe-haven buying of the USD,'' analysts at ANZ bank explained.

Kiwi to firm on covid spread divergence 

''The risk-aversion move is understandable but if global lockdown fears and broad concerns about the pandemic continuing to rage and New Zealand doing a better job at containing it, we’d expect the NZD to do better as it did in May,'' the analysts added.

The day ahead

Looking ahead for the day, there is the ANZ Business Outlook as well as NAB business confidence for Australia, and the Bank of Japan policy decision.  

NZD/USD levels