- Risk-off fails to weaken the bid tone around NZD/USD.
- New Zealand’s relative success in controlling coronavirus supports NZD.
NZD/USD has erased losses early losses amid a persistent risk-off tone in the global equity markets.
At press time, the currency pair is trading largely unchanged on the day near 0.6703, having hit a low of 0.6693 early today.
The recovery may look confounding to many, given the futures tied to the S&P 500 are currently down 0.61%. In other words, US stocks are likely to suffer losses for the third straight day on Wednesday, courtesy of renewed coronavirus concerns.
Global stocks have come under pressure this week, as the second wave of the virus has recently gathered pace across Europe and in the US and is threatening to derail the global economic recovery.
Commodity dollars typically face selling pressure during times of risk aversion in global stocks. However, so far this week, the NZD has shown resilience.
That’s not particularly surprising, as New Zealand is one of the few countries with less than 100 active cases. The country’s relative success in handing the coronavirus crisis weakens the case for immediate action by the Reserve Bank of New Zealand could be keeping the NZD bears at bay. Should the situation in the US and across Europe worsen, the NZD may witness haven flows.