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Market Overview

Day 26 of the official NZ lockdown. 

As we end another week of lockdown it’s hard not to notice how subdued currencies have been. Sure we have had windows of volatility, even small flash moves no-one can explain but overall the main crosses have flatlined with not a whole lot economic activity. Even the USD/JPY has been stuck in the 107’s for the second week running. The price of Crude Oil has been the main talking point with price dropping way below zero, with one oil analyst saying- it’s now worth as much as a bucket of faeces. It stabalised into Friday with price back around a measly but welcomed 17.00 per barrel. This boosted stock prices as well and risk currencies with the kiwi operating around 0.6000 against the big dollar, but, most main currency pairs are trading without any real direction. The Aussie rose across the board as Retail Sales published a surprisingly decent figure (up 8.0%) but was quick to trim its gains. World central banks continue to offer unprecedented easing policies by dishing out massive amounts of cash to stimulate economies from worst case covid-19 related depression scenarios, the bank of Japan will meet again early next week to discuss further easing. On the whole we see another bout of risk-off market sentiment on the horizon amid the ongoing Covid-19 uncertainty heading into the weekend and into next week and expect currency risk related products to decline.        

NZ will ease level 4 Covid-19 restrictions the govt announced Monday. From 27th April NZ will reopen on Level 3 with many businesses able to re-open again although in a contactless manner. The big change will be with restaurants, and food operators who will be able to sell food via delivery service only. Around a third of these businesses nationwide will reopen. Workspaces will also be able to reopen but the government is asking that people who can work from home continue to do so. Non-essential travel and movement will remain the same with most people required to stay at home unless its approved style activity. 

  • Global cases of Covid-19 surpassed 2.7 Million with the number of worldwide cases doubling in the last 15 days since April 05, the next big milestone is 3M infections and 300k deaths
  • A large number of countries are seeing second wave resurgences of Covid-19 cases
  • President Trump is calling for the resignation of WHO’s Director General Tedros after what he calls- mishandling of coronavirus with hundreds of millions of funding to the WHO halted.  
  • Australian Retail Sales figures published up 22% on last year’s results assisting to push up activity m/m by 8%- analysts say these numbers won’t last once panic buying ends once April figures are published 
  • NZ CPI for the March quarter came in at 0.8% higher than the 0.4% expected after rises in cigarettes and rental values. The annual inflation rate is 2.5% which is the highest it has been since September 2011, with people staying at home during coronavirus this had very little impact on overall prices  
  • UK inflation results from March were 1.5% down from the 1.7% in February with the main contributors being drops in housing and utility expenses 
  • The German economic sentiment index rose to 28.2 for April 2020 from -49.5 in March, however the indicator has since worsened to -91.5 corresponding to numbers seen around April 2009- This is just another locomotive going the wrong way     
  • PM Ardern says the NZ borders will probably remain closed until either the virus reaches herd immunity through an inability to be controlled or a vaccine is available. 
  • The number of potential Covid-19 vaccines currently in development around the world is 70

NZD Holds Gains

Day 26 of the official NZ lockdown. 

NZ will ease level 4 Covid-19 restrictions the govt announced Monday. From 27th April NZ will reopen on Level 3 with many businesses able to re-open again although in a contactless manner. The big change will be with restaurants, and food operators who will be able to sell food via delivery service only. Around a third of these businesses nationwide will reopen. Workspaces will also be able to reopen but the government is asking that people who can work from home continue to do so. Non-essential travel and movement will remain the same with most people required to stay at home unless its approved style activity. 

Market positivity towards president Trump opening up the US economy and the possibility Gilead may have found a worthwhile treatment drug for Covid-19 are behind the rise in equities and commodity prices at the weekly close. US strength was stable as investors have one eye on risk products, it was the Japanese Yen which closed the week surprisingly outperforming its rivals. Japan has warned of a breakdown in the health system amidst a wave of new coronavirus cases, an ambulance carrying a patient was turned away by 80 hospitals before he was seen. Japan’s infected population has passed 11,000 Although these numbers are still relatively low compared to other countries, doctors have complained of a lack of protective equipment and Prime Minister Shinzo has been criticised for not bringing in more person to person restrictions.   

Fresh signs of a second wave of coronavirus across parts of Asia have markets nervous this week. Chinese authorities are watching a possible new outbreak in the city of Harbin with more than 40 new infections. New infections are said to be blamed on a lack of controls with the province at zero new cases over the past month.

  • Global cases of Covid-19 surpassed 2.4 Million with the number of worldwide cases doubling in the last 15 days since April 05
  • NZ CPI for the March quarter came in at 0.8% higher than the 0.4% expected after rises in cigarettes and rental values. The annual inflation rate is 2.5% which is the highest it has been since September 2011, with people staying at home during coronavirus this had very little impact on overall prices  
  • In Korea health professionals are watching the virus reappearing in previously affected patients suggesting the disease may have a longer incubation period than thought.
  • US Unemployment numbers continue to grow, Friday’s result showed a further 5.25million people filed for the unemployment benefit in the second week of April which totals 22 million in the past month. 
  • US Equities lost ground heading into the weekly close as the Fed backed off its daily bond purchases, this comes after US indices had their best week’s trading in over 80 years
  • US Company earnings publish again this week with a bunch of big names to post recent performance, there will no doubt be some big losers   
  • UK house price data skewed based on the lack of new listings 
  • Italy have reported the lowest daily number of new coronavirus cases since the 19th of March with the number in intensive care also falling
  • PM Ardern says the NZ borders will probably remain closed until either the virus reaches herd immunity through an inability to be controlled or a vaccine is available. 
  • The number of potential Covid-19 vaccines currently in development around the world is 70

Economic Releases

Monday 20/04

  • 1025am, USD, President Trump Speaks

Tuesday 21/04

  • 5pm, AUD, RBA Gov Lowe Speaks

Thursday 23/04

  • 715pm, EUR, French Flash Services PMI
    • Forecast 25.1
    • Previous 27.4
  • 730pm, EUR, German Flash Manufacturing PMI
    • Forecast 39
    • Previous 45.4
  • 730pm, EUR, German Flash Services PMI
    • Forecast 29
    • Previous 31.7
  • 830pm, GBP, Flash Manufacturing PMI
    • Forecast 42.5
    • Previous 47.8
  • 830pm, GBP, Flash Services PMI
    • Forecast 29.6
    • Previous 34.5

Friday 24/04

  • 1230am, USD, Unemployment Claims
    • Previous 5245k
  • 145am, USD, Flash Manufacturing PMI
    • Previous 48.5
  • 6pm, GBP, Retail Sales m/m
    • Previous -0.30%
  • 8pm, EUR, German ifs Business Climate
    • Previous 86.1
FX Update

FX News

Day twenty of the official NZ lockdown.


The NZ Govt could increase the massive stimulus it is dishing out to limit the damage to the economy. Doubling the current spend to 40Billion would almost certainly have the effect of limiting the unemployment rate to ballooning past 10%. Not only that, increasing it to 60 Billion would assist in hastening the NZ economy back to normal times much quicker.


Traders around the globe will be paying attention to coronavirus numbers again this week, as we look for signs that numbers across the globe have peaked. US Dollar demand will come into play as it has over recent weeks with risk sentiment correlating closely to Covid-19 infection result publishing’s.
US Retail Sales and Aussie unemployment figures will be key this week along with Bank of Canada’s monetary policy announcement. 

Read more

FX Overview

It’s business as usual for us at Direct FX with Dealing and Settlement functions running as per normal. If you need a quote please call or email us, we would love to hear from you.

Day twelve of the official NZ lockdown. 

  • The RBA meet today to discuss monetary policy and the official cash rate- the rate will remain on hold for an extended time- the consensus, but we could see tweaks to the RBA’s bond buying program suite of measures to combat the economic impact of coronavirus
  • Over the weekend RBNZ Governor Orr said the Reserve Bank can keep monetary support going for as long as necessary through the QE program and other tools available. “NZ is in a globally enviable fiscal position with significant headroom”.
  • Boris Johnson has been admitted to hospital 10 days after testing positive for Covid-19 and reportedly hooked up to a ventilator in intensive care
  • Ireland’s Prime Minister Varadkar has re-registered as a medical practitioner, he worked as a doctor before being a politician and intends to start working 1 shift per week
  • The latest coronavirus figures out of USA suggest that between 100,000 and 240,000 Americans will perish
  • Trump has purchased a huge amount of hydroxychloroquine claiming there are strong signs this works on coronavirus 
  • The Japanese government is close to finalising a covid-19 economic relief package
  • Italy have reported the lowest daily number of new coronavirus cases since the 19th of March with the number in intensive care also falling
  • PM Ardern says the NZ borders will probably remain closed until either the virus reaches herd immunity through an inability to be controlled or a vaccine is available. Hopefully it’s the latter, the lockdown won’t be ending early
  • Australia’s deputy Chief Medical Officer Paul Kelly commented saying – vaccines to combat coronaviruses “are not easy” and “in fact, up to now we’ve never had a successful vaccine against a coronavirus. It will be at least 12 possibly 18 months before a vaccine can be developed”.

Market Overview

Day nine of the official NZ lockdown. 

Currencies went from organised to chaotic Thursday but calmed again into Friday sessions.

This virus is extremely good at latching onto people. We are starting to understand the severity of how efficiently Covid-19 spreads. With more than 1million documented cases worldwide it’s become clear based on a recent study that up to 86% of people who contract the virus go undocumented. That is all those who either have no symptoms or mild symptoms and don’t feel the need to be tested. Here lies the problem – it’s these people who will go about their daily activities while inadvertently passing it onto others. In a city called Vo- Italy they carried out an experiment, everybody was tested, with alarming numbers confirming 60% of people were positive and had no symptoms. 

March local Business Confidence made for terrible reading. Headline business confidence dropped 45 points to a net 64% of surveyed reporting that they expect business conditions to deteriorate over the year ahead. You don’t say. When the report released last on the 27th of February confidence fell 6 points to a net 19% deterioration as a contrast. The 4-week lockdown in New Zealand is expected to now go longer and cause June quarter 2020 GDP to fall by around 14% with unemployment rising to over 10%

  • The latest coronavirus figures out of USA suggest that between 100,000 and 240,000 Americans will perish, Trump is considering cancelling flights to badly affected areas
  • Germany extends lockdown to April 19, Italy to April 13
  • British Airways is expected to stand down 36,000 staff
  • PM Ardern says the NZ borders will probably remain closed until either the virus reaches herd immunity through an inability to be controlled or a vaccine is available. Hopefully it’s the latter.
  • Australia’s deputy Chief Medical Officer Paul Kelly yesterday commented saying – vaccines to combat coronaviruses “are not easy” and “in fact, up to now we’ve never had a successful vaccine against a coronavirus. It will be at least 12 possibly 18 months before a vaccine can be developed”.

Kiwi Brushes Aside 0.6000

It’s business as usual for us at Direct FX- Dealing and Settlement functions are running as per normal. If you need a quote please call or email us.  We would love to hear from you.

There’s a strange calmness in the air – you feel it? No anxiety from industry, no panic to get anywhere, no time constraints, just a lockdown journey of human unification. Time stands still almost, perhaps a moment to smell the flowers, a time for reflection?

Day six of the official New Zealand lockdown. 

It’s been another massive week in currencies/global markets with central bankers struggling to come to terms with coronavirus headlines and weak economic data. 
US Dollar weakness Thursday continued into the weekly close, underperforming against the basket of majors, the index falling 4.5%. This marks one of the worst performing week’s since the 2008 GFC reversing the previous week’s 4.12% gain. The kiwi is nearly 6% higher, Aussie 6.12% and British Pound 6.93% on the week. The Fed announced an unlimited “QE” program as congress passed a USD $2Trillion bailout package, the biggest they have ever announced. With the virus spiralling out of control in the US – especially in NY where numbers have reached apocalyptic levels around 60,000 and the total number of deaths just over 1,000.    
The only local data this week is today’s ANZ Business Confidence which is expected to survey poor- the NZD could take a hit post release. The 4 week lockdown in New Zealand is expected to cause June 2020 GDP to fall by around 14% with unemployment rising to 9.0%. But…the recovery won’t be as long winded as other past recessions and 2008 GFC based on current measures in place by the Govt and RBNZ to cushion business and personal financial cost.
Markets opened Monday a lot more relaxed than the previous two weeks due to the safety of lockdown measures and financial measures in place. Movement into Tuesday has not been as wild as the previous two weekly starts- currencies almost look organised.


• New Zealand has added 58 to the infected today with our total infected cases now 647
• I’m struggling to work out why the world’s 2nd and 4th biggest countries by population – India and Indonesia only have around 1,600 cases of Covis-19, surely these numbers are inaccurate, the numbers being tested must be very low.
• PM Ardern says the NZ borders will probably remain closed until either the virus reaches herd immunity through an inability to be controlled or a vaccine is available. Hopefully it’s the latter.
• Crude Oil has been bearish for a few week’s now after Saudi Arabia started a price war and ramped up production, its trading at a 17 year low just off $20.00 a barrel.
• USA now tops the Covid-19 table with 162,835 infected cases and 3,128 deaths
• The US coronavirus Bill was passed yesterday as the US economy stares down one of the worst economic downturns in its history. The 2.2Trillion relief bill aimed at reducing the financial carnage caused by the Covid-19 pandemic

Major Announcements last week:

  • World coronavirus cases 784,381
  • Currency markets comparitively calmer this week

Economic Releases

Tuesday 31/03

  • 1pm, NZD, ANZ Business Confidence
    • Previous -19.4
  • 2pm, CNY, Manufacturing PMI
    • Forecast 44.9
    • Previous 35.7

Wednesday 01/04

  • 3am, USD, CB Consumer Confidence 
    • Forecast 115.1
    • Previous 130.7

Thursday 02/04

  • 115am, USD, ADP Non-Farm Employment Change 
    • Forecast -125k
    • Previous 183k
  • 3am, USD, ISM Manufacturing PMI
    • Forecast 46
    • Previous 50.1

Friday 03/04

  • 130am, USD, Unemployment Claims
    • Previous 3,283k

Saturday 04/04

  • 130am, USD, Average Hourly Earnings m/m
    • Forecast 0.20%
    • Previous 0.30%
  • 130am, USD, Non-Farm Employment Change 
    • Forecast -81k
    • Previous 273k
  • 130am, USD, Unemployment Rate
    • Forecast 3.80%
    • Previous 3.50%
  • 3am, USD, ISM Non-Manufacturing PMI
    • Forecast 48
    • Previous 57.3

FX Update

A range of major currencies continue to operate around multi year lows, some multi decade lows with investors scrambling for the safe haven US Dollar. The Australian Dollar was recently at an 18 year low.  

The Reserve Bank of New Zealand will buy NZ 30 Billion in government bonds over the following 12 months (QE program) in efforts to keep interest rates low as the coronavirus impacts the local economy. As the pandemic worsens risk aversion has resulted in stricter credit conditions and reduced the impact of recent interest rate cuts. The RBNZ has changed its mind for the time being on delivering negative rates. While we could still see rates at zero, the plan with QE now is a good one in which we should see increased liquidity/cash flow back into the economy. Jacinda Ardern announced alert level 3 yesterday moving to alert level 4 on Wednesday – Alert level 4 will remain in place for about 4 weeks. Infected cases increased to 102 Monday and to 155 today. Only essential businesses will remain open. The govt will raise the cap on its wage subsidy scheme which will inject a further $4Billion onto the economy over the next 11 weeks. There is an agreement with banks to provide support for people with mortgages and a business finance scheme for businesses for those impacted by covid-19, details of what this looks like will be announced over the coming weeks.  

Death rates continue to publish scary numbers and the health systems are well overloaded in Spain and Italy. More measures will come into place to self-isolate and more borders will close around the world. Japan’s Abe said they are looking at postponing the Olympics – very sad but it must be done as the safety of people cannot be guaranteed.