NZD/USD: Consolidates recent gains to sub-0.6350 region with eyes on coronavirus, calendar

• NZD/USD gradually weakens from Monday’s top, stay far from the volatile day’s low.
• Global government’s actions to counter coronavirus grab the spotlight.
• New Zealand Manufacturing Sales, speech from RBNZ’s Orr and China’s inflation numbers will decorate the economic calendar.

NZD/USD registers a mild weakness from the previous day’s high to 0.6335 as the Asian session begins for Tuesday. The coronavirus-led week-start volatility has likely taken a halt, for now. However, global policymakers’ efforts to counter negative implications and spread seem to keep the risk-tone heavy. Traders may await key signals from the economic calendar for fresh impulse.

In addition to the Italian PM Conte’s signal to limit transmission in the whole country, due to coronavirus (COVID-19), reactions from Canada, Spain, the US and the UK also show the global policymakers’ rush to tame the pandemic.

In doing so, they unintentionally harm the global supply chain while also spreading fears that the virus will weigh on the economy.

As a result, the market’s risk-tone remains under pressure despite recovering a bit from Monday’s carnage. Even so, the US 10-year treasury yields take rounds to 0.5% following Wall Street benchmarks’ plunge into the sea of red.

Traders will now pay attention to the economic calendar that carries the fourth quarter (Q4) New Zealand Manufacturing Sales, expected 4.3% versus -0.3% prior, followed by a speech from the RBNZ’s Orr as well as China’s CPI and PPI data for February.

RBNZ’s Orr is less likely to provide any links relating to current economic conditions or the Reserve Bank’s outlook for the Official Cash Rate (OCR) while discussing principles governing the use of unconventional monetary policy tools. Further, China’s CPI may soften to 5.2% YoY from 5.4% prior while PPI could shrink 0.3% from 0.1% prior.

While the economic calendar may flash mixed reading and can offer intermediate moves, COVID-19 updates will hold the driver’s seat.

Technical Analysis

Unless providing a sustained break beyond February 11 low surrounding 0.6380, NZD/USD prices are less likely to avoid visiting the last week’s low near 0.6200.