New Zealand Dollar Falls Below 70

The New Zealand dollar has extended its losses and t the start of the week. NZD/USD is currently trading at 0.6970, down 0.40%.

The deterioration in risk sentiment sent the New dollar sharply lower on Friday, as the currency fell 0.68% and ended the week just below the 70 level, at 0.6999.

There are hot spots worldwide which are making investors nervous. In Europe, COVID-19 has resurged in a fourth wave, which will likely lead to lockdowns.

In China, the central bank has taken measures to limit speculation in the yuan and stem its appreciation. Finally, the Russian military build-up on the border with Ukraine could lead to a military escalation.

These hotspots have resulted in a risk-off environment which is weighing on minor currencies like the New Zealand dollar.

New Zealand will release retail sales later on Monday. In the second quarter, retail sales posted a strong gain of 3.3%. Another solid gain for Q3 would give the New Zealand dollar some badly needed support.

Next Wednesday will feature this week’s highlight, the RBNZ policy decision. The central bank is widely expected to raise rates for a second straight month, but it’s anybody’s bet whether the bank will hike by 50 bps or go for a raise of 25 bps.

The uncertainty could result in some significant volatility for the New Zealand dollar this week.