Financial Markets Wrap

NZD higher in July; mixed performance on the crosses

Jason Wong -

• Extension of recovery in risk appetite supports NZD, although poor USD performance was behind much of the gain
• NZD weaker against strong performance by EUR and GBP, following historic agreement on EU Recovery Fund
• Central bank buying drives NZ and global rates lower

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Risk Assets Outperform Further In June

Jason Wong -

• The NZD rose by 4% in June and was the best performing of the majors, so was higher on all the key crosses
• Fuelled by further recovery in risk assets; global economic data improved considerably as lockdown restrictions eased
• Central bank bond buying restrained upward pressure on global rates; NZGBs underperformed on increased supply

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Further recovery in risk assets in May

Jason Wong -

• Reduced concern about the spread of COVID19 and the reopening of economies supported risk assets in May
• Commodity currencies outperformed, led by the AUD
• RBNZ’s aggressive QE policy kept NZ rates suppressed, with fresh record lows intra-month

Full Currency Research is available to BNZ Wholesale clients upon request, please email bnz_research@bnz.co.nz to subscribe.