Despite the bullish comments from RBNZ, the fear of coronavirus impacting the economy will keep investors cautious. Short NZD/USD?
- RBNZ kept official cash rates unchanged at 1.00% as widely expected.
- However, what surprised the market was the optimism from RBNZ who said that they are done with easing unless the coronavirus situation worsens.
- The surge in coronavirus cases in Hubei has seen the market switch from the previous neutral to a risk-off sentiment which is weighing on NZD.
- We believe that the uncertainty will stem previous optimism that the disease might be peaking.
- RBNZ optimism might falter in the near future as the coronavirus could weaken the global economy, including New Zealand’s.
- NZD/USD could continue to head lower towards the 0.6200 price level.
Fullerton Markets Research Team
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