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.
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