NZ dollar rebounds; traders looking for the next headline

The kiwi was trading at 59.91 US cents at 5pm. Photo / 123RF

The New Zealand dollar rebounded after several days of selling pressure and could even end the week square as traders scan the headlines for the next reason to act, such as developments in the coronavirus crisis.

The kiwi was trading at 59.91 US cents at 5pm in Wellington from 59.48 cents at the same time yesterday and not far below the 60.30 cents it settled at in New York last Friday. The trade-weighted index was at 68.21 from 67.80.

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Imre Speizer, currency strategist at Westpac, said equities markets today have been more or less flat, giving little direction on risk sentiment, the major factor driving the domestic currency at the moment.

"Some days it looks like it's going to break down, some days it looks like it's going to break up, but if you stand back a little you will see that for the last month or so it's gone sideways. It's in a holding pattern," Speizer said.

Global Covid-19 infections have passed 2.7 million and deaths are approaching 200,000. But New Zealand's position continues to look considerably better with just five new cases today, taking the total infections to 1,456 and an additional death taking the number who have died here to 17.

Much of the world is focusing on the US, which has far more infections than any other country at 886,709 and more deaths at 50,243, to see whether plans by some states to begin reopening their economies will lead to an upsurge in infections.

One reason equities markets have stalled is that the hype about an anti-viral drug being a potential treatment for Covid-19 was deflated by a leaked report.

The report was a draft of a clinical trial in China of remdesivir, made by biopharmaceuticals company Gilead, and showed the drug didn't speed up improvement of patients with the infection or prevent them from dying. The report was briefly published on the World Health Organisation's website and then taken down.

The New Zealand dollar was trading at 94.23 Australian cents from 94.19 cents at 5pm yesterday. It was at 48.50 British pence from 48.19, at 55.61 euro cents from 54.99, at 64.48 yen from 64.11 and at 4.2438 Chinese yuan from 4.2130.

The bid price on the two-year swap rate closed at 0.2750 per cent from 0.3230 per cent yesterday, while 10-year swaps were at 0.8400 per cent from 0.8550.