The New Zealand dollar had a roller-coaster day, plummeting as the market accepted that a potential Covid-19 vaccine is a long way from being proven and then bolstered after Reserve Bank governor Adrian Orr told Bloomberg he's in no hurry to usher in negative interest rates.
The kiwi was trading at 61.03 US cents at 5pm in Wellington from 60.45 cents at the same time yesterday. Earlier today, it fell as low as 60.63 cents on the vaccine disillusionment before soaring as high as 61.20 cents on Orr's comments.
"Markets had priced in negative rates for potentially late this year and that doesn't look likely now," said Imre Speizer, currency strategist at Westpac.
Orr reiterated that he's prepared to take rates negative "but a lot later," although he expects to see New Zealand retail interest rates decline further.
Last week, the RBNZ left the door open to negative interest rates while the US Federal Reserve and the Reserve Bank of Australia explicitly ruled them out. That was seen as a signal to sell New Zealand dollars.
Equities markets and other riskier assets, including the New Zealand dollar, rallied yesterday after US biotech company Moderna reported that a small first study of its experimental vaccine, designed to look at its safety, had resulted in no major concerns and also showed the vaccine could create an immune system response.
But then vaccine experts expressed scepticism about the trial results, telling the medical publication StatNews that the company has yet to release significant data to support its claim that its drug successfully produced antibodies in trial subjects.
StatNews noted that Moderna's market value had hit US$29 billion, "an astonishing feat for a company that currently sells zero products."
In science, "numbers speak much louder than words," it said. "While Moderna blitzed the media, it revealed very little information, and most of what it did disclose were words, not data."
The New Zealand dollar was trading at 93.19 Australian cents at 5pm from 92.63 cents at the same time yesterday. It was at 49.79 British pence from 49.53 pence, at 55.77 euro cents from 55.41 cents, at 65.77 yen from 64.91 yen and at 4.3368 Chinese yuan from 4.2967 yuan.
The trade-weighted index was at 68.90 from 68.32.
The bid price on the two-year swap rate closed at 0.1300 per cent from 0.1275 per cent yesterday, while 10-year swaps were at 0.5600 per cent from 0.5925 per cent.