- Coronavirus fears weigh on China-proxy NZD on Thursday.
- US Dollar Index stays calm near 99 handle.
- Coming up: Weekly Jobless Claims and CPI data from US.
The NZD/USD pair registered decisive gains on the back of Reserve Bank of New Zealand’s hawkish policy outlook and closed the day 40 pips higher. With reemerging coronavirus fears weighing on the demand for China-proxy antipodeans, the pair started to erase its gains and was last seen trading at 0.6452, down 0.15% on the day.
RBNZ adopts surprisingly hawkish stance
RBNZ on Wednesday explained that it was unlikely to opt out for a rate cut in 2020. Commenting on the policy statement, “we have been holding onto the minority view that the RBNZ will maintain its OCR this year. Today’s meeting certainly reinforces our view that the RBNZ is done cutting rates for now, following the cumulative 75bps rate cuts last year,” said Lee Sue Ann, Economist at UOB Group.
However, RBNZ Governor Orr noted that if the coronavirus outbreak were to last for a sustained period, it would have an impact on the monetary policy.
In the meantime, China reported a huge jump in confirmed coronavirus infections on Thursday. Although the increase was reportedly caused by a change in the counting method, investors stay away from risk-sensitive assets while assessing the potential impact of the virus on the global economy.
In the second half of the day, the Consumer Price Index data, which is expected to tick up to 2.4% on a yearly basis, from the US will be looked upon for fresh impetus. Ahead of this data, the US Dollar Index is moving sideways near the 99 mark, allowing the risk perception to drive the pair’s action.
Technical levels to watch for