NZD/USD pares losses and approaches day highs at 0.6460

• NZD/USD bounces at 0.6425 and returns near day highs at 0.6560.
• The kiwi suffers on concerns about a second COVID-19 wave.
• Westpac's FX analysts see he pair at 0.65 by year-end.

New Zealand dollar’s rejection from 0.6460 earlier today has been contained above 0.6425, and the pair has crawled back to the mid-range of 0.6400. The kiwi has managed to pare losses and turn positive on daily charts as fears of a second COVID-19 crisis ease, and equity markets trim losses.

Kiwi suffers on risk aversion

The pair opened the week on a soft note, diving to two-week lows at 0.6380 with the investors spooked by reports of a new wave of coronavirus cases in China and the increase of infections in diverse states of the US.

Furthermore, the macroeconomic data from China has failed to lift the spirit. Industrial output expanded below expectations, at a 4.4% pace in May, while investment and recovery have remained negative. These figures reaffirm the idea that the recovery from the COVID-19 shutdown might be longer than initially thought.

NZD/USD to trade at 0.65 by year-end – Westpac

The FX Analysis team at Westpac have reviewed New Zealand’s economic forecasts and see the pair trading near the current levels by year-end, “We now forecast annual GDP growth for 2020 compared to 2019 will be -4% (previously -6%) (…) We have revised our forecast for the peak in unemployment to 8% (down from our earlier estimate of 9.5%) (…) We now expect that the NZD/USD pair will rise to 0.65 by the end of this year.”