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  • Markets are recovering from the flu and antipodeans are better bid.
  • A series of encouraging data is lifting market optimism, supporting of the commodity complex. 

NZD/USD is supported on the flows through the Aussie and on positive sentiment surrounding the unconfirmed potential cure for the coronavirus. NZD/USD is currently trading +0.11% for the session having climbed from the lows in the 0.6440s earlier the week reaching a corrective high of 0.6503.

The positive tones have really started to kick in for the antipodeans which, to date, had otherwise been suffering backlash from investors for the lacklustre performances of both the Aussie and the New Zealand economies up until the later part of 2019. The central banks had turned uber dovish, slashing rates to near to zero and in the case of the Reserve Bank of Australia at least, raising the prospects of QE. 

However, the tides have started to turn and risk sentiment is lifting both the Kiwi and AUD following a series of more upbeat data from both economies and dialled down rhetoric at the central bank meetings. 

Coronavirus breakthrough cure unconfirmed, but risk-on nonetheless

Meanwhile, with respect to the coronavirus, overnight, global markets soared Wednesday on reports of a breakthrough treatment for the coronavirus. However, there is an element of scepticism from public health officials. “There are no current therapeutics that are thought to be highly effective against coronaviruses in general,” Dr Mike Ryan, executive director of World Health Organization (WHO), told reporters on Wednesday.


Nonetheless, investors saw cause for optimism that the deadly outbreak could be stopped before inflicting deeper economic wounds and US stocks as well as US yields bounced back. The commodity complex, as well as EMs, have started to show signs of green shoots, with the MSCI moving higher and Thomson Reuters CRB Index starting to take a less bearish shape on the charts.

Looking to the RBNZ

It is widely expected that the OCR unchanged at 1% next Wednesday, indicating that they expect to sit on the sidelines for the time being, but that they are watching emerging global risks closely.

“They will acknowledge the human impact of the tragic new coronavirus, with cautious language about possible risks to the economic outlook. Domestic conditions give the RBNZ scope to wait and see how developments unfold,” analysts at ANZ explained. 

We expect the OCR track will be broadly unchanged, despite a stronger domestic backdrop. The economic impacts associated with the outbreak are highly uncertain and are likely to sit largely in the ‘risks’ basket for now. But a short-term negative impact on GDP growth, commodity prices and global wholesale interest rates may feature in the central forecast. Exactly how they incorporate it won’t matter too much – any forecast will be out of date in a week.

 NZD/USD levels