NZ dollar hits a ceiling as sentiment in equities markets starts to sour

The kiwi was trading at 60.66 US cents at 5pm.

The New Zealand dollar was weaker after failing to break through a strong resistance level and as sentiment in US equities markets soured.

The kiwi was trading at 60.66 US cents at 5pm in Wellington from 61.20 at the same time yesterday while the trade-weighted index was at 68.58 from 69.22.

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"It's had a number of attempts to rally past 61.15/61.40, but there's quite a lot of resistance at 62" US cents, said Tim Kelleher, head of foreign exchange sales at Commonwealth Bank of Australia.

"The last time we were back here was in March – it's rallied 6.5 cents off the lows so it's quite a big move," Kelleher said.

Selling of kiwi dollars was by both locals and offshore, he said.

"Given what we've seen today, I think we've seen the highs for now."

Across the Tasman, Australia has just recorded the largest ever fall in consumer sentiment in the Westpac survey's 47-year history – its index fell 17.7 per cent to 75.6 – a reading below 100 indicates consumers are pessimistic.

Australians are also bracing for employment numbers due tomorrow and economists are forecasting job losses of 33,000 with the unemployment rate rising from 5.1 per cent to 5.4 per cent.

Sentiment also appears to be turning in equities markets – while the New Zealand market has been higher today, Australian shares were down and so were the futures for all three key US indices.

The US market is awaiting March retail sales data and consensus expectations are for a steep 8 per cent drop for the month due to the rapid spread of Covid-19. That follows a 0.5 per cent decline in February.

The US market is also awaiting March quarter company reports with some trepidation, particularly about how companies see the outlook, given that so much of the Western world is in lockdown to try to halt the spread of the coronavirus.

In New Zealand, which is aiming for a more ambitious goal of eradication, the number of people confirmed as infected rose by 20, taking the nation's total to 1,386 with nine deaths. The daily infection rate has dropped from twin peaks of 89 on April 2 and April 5.

Worldwide, the reported number of people infected is approaching two million with 126,741 people having died.

The New Zealand dollar was trading at 94.69 Australian cents from 95.25 cents at 5pm yesterday. It was at 48.11 British pence from 48.71, at 55.27 euro cents from 55.92, at 64.95 yen from 65.91 and at 4.2791 Chinese yuan from 4.3110.

The bid price on the two-year swap rate closed at 0.4000 per cent from 0.4350 yesterday, while 10-year swaps were at 0.9550 per cent from 0.9200.