Risk-sentiment has already seen multiple shifts this week. While hopes of fresh economic stimulus in major economies are keeping the relatively risky New Zealand Dollar appealing today though, the Pound is still climbing.
Investors are buying the Pound in reaction to some surprisingly strong UK job market data, despite coronavirus concerns underlying seemingly optimistic figures.
A seemingly amicable tone in the latest round of Brexit negotiations is also helping the Pound to hold advance attempts today.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate rose by 0.7% yesterday, with the pairing currently trading around NZ$1.95.
The New Zealand Dollar (NZD) suffered from a sell-off of risky-assets yesterday after the US Federal Reserve’s Chair Jerome Powell gave a dovish testimony before Congress. Again, he reiterated the Fed’s uncertainty over America’s economic recovery from the coronavirus crisis.
Mr. Powell commented:
‘The levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery.’
‘Much of that economic uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it. Until the public is confident that the disease is contained, a full recovery is unlikely.’
As a result, the ‘Kiwi’ has suffered from dampened risk appetite, with investors now fearing the worst for the global economy. Any further hints that the US – the world’s largest economy – could suffer a significant downturn would drag down global market confidence.
In New Zealand’s economic news, yesterday saw the release of the NZ GDT Price Index, which rose above forecasts from 0.1% to 1.9%. With dairy being one of New Zealand’s largest commodities, this brought some hope for the nation’s economic recovery.
GBP/NZD LONG (Buy)
ENTER AT: 1.9455