Home Daily Commentaries Coronavirus continues to hammer commodities and market sentiment

Coronavirus continues to hammer commodities and market sentiment

Daily Currency Update

NZD - New Zealand DollarThe New Zealand dollar’s decline continued through trade on Thursday falling through 0.65 and closing the day as one of the worst performers among G10 currencies. Market sentiment deteriorated as concerns the Coronavirus will have an increasing impact on growth outlooks escalated as more new cases were reported and there appears no immediate solution to this growing health emergency. New Zealand’s exposure to China as a key destination for domestic exports means the NZD, alongside its antipodean counterpart, has born the brunt of the market correction. The NZD has fallen 4% through the first month of the year, touching fresh lows at 0.6485 before edging higher into this mornings open. Attentions remain squarely affixed to the ongoing evolution of the Coronavirus with sustained uncertainty likely to see the NZD test 0.6460/50 through the short term.

Key Movers

The Great British Pound jumped through trade on Thursday following the Bank of England’s decision to leave interest rates on hold at 0.75%. The call surprised a majority of market analysts with just over 50% pricing in an interest rate reduction. A string of stronger data sets since the general election in December afforded the monetary policy setting committee a reprieve and enables them to hold onto at least some ammunition should it need to revive the economy in the wake of Britain’s European divorce. With a March rate adjustment all but priced out as well Sterling rallied through 1.31 to touch 1.3110. Investors however remain wary as today marks the UK official exit from the EU and starts the clock on an 11 month transition period wherein a new trade agreement must be reached. For Sterling to extend upside back toward 1.40 and beyond a new and favourable trade agreement must be reached quickly. The US dollar index fell through trade on Thursday as advanced GDP data indicated the US economy grew at its slowest annual pace in three years, while personal consumption fell dramatically. The soft prints fell short of both White House and Federal Reserve targets and increased the probability of a rate cut come March.

Expected Ranges

  • NZD/USD: 0.6440 - 0.6520 ▼
  • NZD/EUR: 0.5840 - 0.5940 ▼
  • GBP/NZD: 1.9940 - 2.0480 ▲
  • NZD/AUD: 0.9615 - 0.9710 ▼
  • NZD/CAD: 0.8530 - 0.8620 ▼