FX News

Day 11-  Level 3 NZ lockdown. 

Comparisons between economic reviews and macro themes from the beginning of this year to today’s releases are vastly different. Times of improving conditions and economic recovery have fast eroded in the current global landscape we are now part of. Monetary policies of world leading central bank countries have backtracked from solid economic indicators such as improving employment and inflation expectations to what we see today. 

Coronavirus has indeed put up a massive roadblock up to any global momentum. Strategy of the RBNZ has been like all other central banks- bringing out all arsenal of extreme measures to combat the fallout of the virus with record fiscal stimulus and QE (quantitative easing) and much lower interest rates-  New Zealand currently has the lowest cash rate on record at 0.25%.

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Day 8-  Level 3 NZ lockdown. 

Zero new cases of coronavirus were reported yesterday in New Zealand, the first time since the first reported case in the country on 28th February. Standard and Poor’s rating agency have rated NZ credit rating a AA suggesting a positive outlook based mainly off a strong fiscal position.

Day 2-  Level 3 NZ lockdown. 

A wave of optimism filled the air Monday with investors feeling comfortable around risk investments as countries around the world start to relax Covid-19 restrictions. The New Zealand Dollar has held its ground over the 0.60 mark, but the success story of late has been the Australian Dollar. The AUD has been the strongest performer not just over the past week but it has outperformed all its peers since April 6th and continues to be well supported. Coronavirus results have not only been extremely good (bit of luck perhaps) but Chinese data has also been favorable, boosting prospects of economic trade between the two countries. With supply chain disruption subsiding and a number of large companies back online things are starting to improve. Both NZ and Australia remain susceptible to mood changes and massive downturn in economic activity with huge monetary and fiscal stimulus still required to prop things up. But for now both the NZD and AUD are being driven higher.         

Tuesday 28/04

• 930am, USD, President Trump Speaks

Wednesday 29/04

• 2am, USD, CB Consumer Confidence
  • Forecast 88.2
  • Previous 120
• All Day, JPY, Bank Holiday
• 130pm, AUD, CPI q/q
  • Forecast 0.20%
  • Previous 0.70%
• 130pm, AUD, Trimmed Mean CPI q/q
  • Forecast 0.30%
  • Previous 0.40%

Day 26 of the official NZ lockdown. 

As we end another week of lockdown it’s hard not to notice how subdued currencies have been. Sure we have had windows of volatility, even small flash moves no-one can explain but overall the main crosses have flatlined with not a whole lot economic activity. Even the USD/JPY has been stuck in the 107’s for the second week running. The price of Crude Oil has been the main talking point with price dropping way below zero, with one oil analyst saying- it’s now worth as much as a bucket of faeces. It stabalised into Friday with price back around a measly but welcomed 17.00 per barrel. This boosted stock prices as well and risk currencies with the kiwi operating around 0.6000 against the big dollar, but, most main currency pairs are trading without any real direction. The Aussie rose across the board as Retail Sales published a surprisingly decent figure (up 8.0%) but was quick to trim its gains. World central banks continue to offer unprecedented easing policies by dishing out massive amounts of cash to stimulate economies from worst case covid-19 related depression scenarios, the bank of Japan will meet again early next week to discuss further easing. On the whole we see another bout of risk-off market sentiment on the horizon amid the ongoing Covid-19 uncertainty heading into the weekend and into next week and expect currency risk related products to decline.        

Day 26 of the official NZ lockdown. 

NZ will ease level 4 Covid-19 restrictions the govt announced Monday. From 27th April NZ will reopen on Level 3 with many businesses able to re-open again although in a contactless manner. The big change will be with restaurants, and food operators who will be able to sell food via delivery service only. Around a third of these businesses nationwide will reopen. Workspaces will also be able to reopen but the government is asking that people who can work from home continue to do so. Non-essential travel and movement will remain the same with most people required to stay at home unless its approved style activity. 

Day twenty of the official NZ lockdown.

The NZ Govt could increase the massive stimulus it is dishing out to limit the damage to the economy. Doubling the current spend to 40Billion would almost certainly have the effect of limiting the unemployment rate to ballooning past 10%. Not only that, increasing it to 60 Billion would assist in hastening the NZ economy back to normal times much quicker.

Traders around the globe will be paying attention to coronavirus numbers again this week, as we look for signs that numbers across the globe have peaked. US Dollar demand will come into play as it has over recent weeks with risk sentiment correlating closely to Covid-19 infection result publishing’s.
US Retail Sales and Aussie unemployment figures will be key this week along with Bank of Canada’s monetary policy announcement. 

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