NZD - New Zealand Dollar
Friday’s session saw the New Zealand Dollar fall from 0.6450 to 0.6398, representing a year to date low against the US Dollar. AUD/NZD traded sideways between 1.0394 and 1.0438 as the Aussie also struggled on the day. The NZD, which continues to trade as a proxy for Chinese and global growth, has been burdened by the ongoing Coronavirus situation as the number of confirmed cases continue to rise at a steady pace. Therefore, it will continue to experience headwinds if the news remains negative whilst any positive stories could see some upside for the NZD.
Monday’s session is light on the data front as we expect the NZD to continue to trade on global risk sentiment and in particular, developments in the Coronavirus situation. Analysts will also be looking to Chinese inflation and lending data for January as a gauge of how the Chinese economy was tracking before the virus outbreak. Wednesday sees the key risk event for the week as we have the RBNZ’s monetary policy statement due. Market pricing is implying a near-zero percent chance of an easing by the central bank.
Market sentiment continues to deteriorate amid growing concerns around the Coronavirus epidemic gripping Asia. Although we did see some stronger than expected US employment data out of the worlds largest economy on Friday, we saw classic risk off flows as traders continued to brush aside economic data in favor of risk sentiment. US non-farm payrolls were much stronger than expected, coming in at 225K for the month whilst the unemployment rate continues to remain at historical lows.
Safer currencies rose on Friday with the JPY the best performer on the day, ranging between 1.954 and 110 against the USD. The USD index was also up on the day with the EUR falling 40 points from 1.0980 to 1.0942, representing a four-month low. In line with risk sentiment, commodity prices were soft as Crude fell 1.1%, copper 1.3% whilst gold rose 0.2%. With a slow start to the week on the data front, we’re expecting market pricing to continue to take its cues from the evolving coronavirus situation, with growth correlated currencies AUD and NZD to be particularly vulnerable to developments. Notable risk events later in the week are not only the RBNZ’s monetary policy statement on Wednesday but also UK Q4 GDP numbers due out Tuesday, testimony from Fed Chair Powell on Thursday and US CPI numbers due out on Friday.
0.6415 – 0.6355 ▼NZD/EUR:
0.5860 – 0.5835 ▼GBP/NZD:
2.018 – 2.003 ▲AUD/NZD:
1.0393 – 1.0450 ▼NZD/CAD:
0.8480 – 0.8550 ▼