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.

    Breaking News 20200214_RBNZ-NZD

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Fullerton Markets Research Team

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