NZD/USD declines below 0.6600 amid coronavirus fears
- NZD/USD begins the week on the backfoot.
- The risk of the Chinese virus outbreak propels the US dollar’s safe-haven demand, also weighing on commodity-linked currencies.
- Almost an empty economic calendar pushes traders to risk headlines for fresh impulse.
NZD/USD declines to 0.6590 at the start of the week’s Asian trading session on Monday. In doing so, the pair stops the previous two-day recovery, backed by upbeat New Zealand data, as fears of the Chinese virus outbreak weigh on trade sentiment. Thursday’s New Zealand Trade Balance becomes the only data at the domestic front, which in turn keeps the traders’ dependence on qualitative catalysts the most.
As a result, news of coronavirus will be getting even more attention, in addition to being the world’s largest commodity player and the second-largest economy. The humanly transmitted virus from China’s Wuhan has already crossed borders while taking 56 lives and infecting above 2,000 inside the dragon nation. The economy has extended the New Year Holidays till February 02, no deadline for schools, to better concentrate on the virus than celebration.
What’s alarming is The Washington Post relies on the Chinese Health Minister to claim an increase of 50% in coronavirus cases in just 24 hours. Also, a viral video of a Chinese nurse mentioning 90,000 infected people adds to the market’s fear.
Bloomberg's news that the Trump administration expans alluminium, steel tariffs on some imported products also weigh on the New Zealand dollar.
With this, investors prefer the US dollar over other currencies, especially the Antipodeans, due to the greenback’s safe-haven nature.
The kiwi pairs earlier benefited from New Zealand’s upbeat inflation numbers that helped analysts at the Australia and New Zealand Banking Group (ANZ) to hold their “no change in Official Cash Rate (OCR)” forecast.
It's worth mentioning that the latest revisions to New Zealand's population data resulted in an upward revision to third quarter (Q3) jobs growth from 0.9% to 1.0%.
Moving on, the economic calendar is mostly empty during the week except for Thursday’s New Zealand December trade numbers. However, events like Tuesday’s Durable Goods Orders and Wednesday’s FOMC from the US could entertain the market players. For today, the US New Home Sales and Dallas Fed Manufacturing Business Index will decorate the economic calendar.
Technical Analysis
The last week’s low near 0.6580 and December 18, 2019, low close to 0.6555 are on the seller’s radar ahead of a 200-day SMA level of 0.6512. On the contrary, 21-day SMA near 0.6635 caps near-term upside.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
