- NZD/USD reversal from 0.6450 extends to session lows at 0.6400.
- The kiwi loses ground against a stronger US dollar as market sentiment deteriorates.
- A second coronavirus wave will hurt the kiwi – CIBC.
The New Zealand dollar has reversed earlier gains on Friday, retreating from session highs at 0.6450 to 0.6400 area, eyeing three-week lows at 0.6380. The risk-sensitive kiwi has lost ground as market sentiment soured on the back of a global increase of coronavirus infections and has turned negative on daily charts.
NZD loses ground as market sentiment sours
Demand for the New Zealand dollar has waned on the US session as market sentiment deteriorated on the back of downbeat news about the progress of the COVID-19 pandemic. The global increase of infections and news about Texas Governor, Greg Abbott rolling back plans to ease restrictions have weighed on risk appetite.
On the macroeconomic front, US personal spending increased 8.2% in May, below market expectations of a 9% increment, while the personal income dropped 4.2%, in this case beating market expectations of a 6% decline.
A second wave of coronavirus will hit the kiwi – CIBC
From a wider perspective, the CIBC FX analysis team warns about the impact of a second round of infections in the New Zealand dollar, “While New Zealand was much heralded for its efforts in combating the virus within the country, the recent week or so has seen an emergence of a second-round of infections – albeit in limited numbers and traced to returning overseas arrivals. Still, any prospect of second-round infections stalling an incipient economic recovery, or forcing a return to more restrictive rules, would be detrimental.”
NZD/USD key levels to watch
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