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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. 

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International Trade

Economic Releases

Tuesday 7/04

  • 230am, CAD, BOC Business Outlook Survey
  • 430pm, AUD, Cash Rate
    • Forecast 0.25%
    • Previous 0.25%
  • 430pm, AUD, RBA Rate Statement

Thursday 09/04

  • 1130pm, EUR, ECB Monetary Policy Meeting Accounts
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FX News

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. 

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Ian Dobbs

Kiwi Brushes Aside 0.6000

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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. 

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Economic Releases

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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

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Howard Wilcox

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.

NZ Alert Level

NZ Alert Level – Dealing Conditions

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The NZ Government has moved to ‘Alert Level 3’ and will go to ‘Alert Level 4’ in the next 48 Hours.
 
This will mean the closure of Non-Essential Business.

Direct FX has made preparations for this well in advance and will implement our contingency plan immediately.
 
All Foreign Exchange services will continue as normal, and our dealers are available on phone (Business Numbers) , mobile and email. We will quote, execute deals and effect payments as per normal business conditions.
 
If any of our clients need any clarification, or have any questions, please feel free to call us or email.
 

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International Trade

Economic Releases

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Below are the weekly economic releases for this week (NZT)

Tuesday 24/03

  • 915pm, EUR, French Flash Services PMI
    • Forecast 39.6
    • Previous 52.5
  • 930pm, EUR, German Flash Manufacturing PMI
    • Forecast 40.1
    • Previous 48
  • 930pm, EUR, German Flash Services PMI
    • Forecast 43
    • Previous 52.5
  • 1030pm, GBP, Flash Manufacturing PMI
    • Forecast 45.1
    • Previous 51.7
  • 1030pm, GBP, Flash Services PMI
    • Forecast 45
    • Previous 53.2

Wednesday 25/03

  • 245am, USD, Flash Manufacturing PMI
    • Forecast 45.1
    • Previous 50.7
  • 10pm, EUR, German Final ifo Business Climate
    • Forecast 87.9
    • Previous 87.7
  • 1030pm, GBP, CPI y/y
    • Forecast 1.60%
    • Previous 1.80%

Friday 27/03

  • 1am, GBP, MPC Official Bank Rate Votes
    • Forecast 0-0-9
    • Previous 0-9-0
  • 1am, GBP, Monetary Policy Summary
  • 1am, GBP, Official Bank Rate
    • Forecast 0.10%
    • Previous 0.10%
  • 130am, USD, Unemployment Claims
    • Forecast 750k
    • Previous 281k

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Howard Wilcox

Central Banks slash cash rates to boost economies amid Covid-19 fears.

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The Melt down in Financial Markets continued into Monday following last week’s massive sell off in just about every financial instrument since the 2008 Global Financial Crisis. 

The RBNZ cut rates at 8am Monday morning from 1.00% to 0.25% in an unscheduled announcement. Last week Orr said he would not need to make a one off policy meeting announcement but with the Covid-19 impacting just about everyone, the central bank decided to cut sooner rather than the scheduled 25th March outing. Prime Minister Ardern announced travel restrictions over the weekend that require all people travelling into the country to self-isolate for 14 days. The New Zealand tourism industry is expected to grind to a halt with NZ expected to dip into recession for as long as the virus remains uncontrolled. If a May QE program was necessary from May this would undoubtedly put downward pressure on the NZD. NZ second quarter GDP is expected to come in much lighter as the economic fallout takes a toll. An economic “business fiscal package” is to be announced today at 2pm by Jacinda Ardern and is said to be significant.  

Spain and France have announced emergency restrictions like Italy banning people from public gatherings. The epicentre is now Europe with this region being in the centre of the coronavirus epidemic.  Read more

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