The Kiwi Dollar has moved lower overnight as the US Dollar found buying support on optimism that proposed stimulus measures would ease the impact of the coronavirus impact. Adding to global market optimism was news of Chinese President Xi’s visit to Wuhan, the centre of the virus outbreak, suggesting that China is getting on top of the situation. However the nationwide lockdown in Italy is keeping any market optimism in check.
Dollar Rises on Hopes of US Government Action
President Trump said he is meeting with Senate and House Republicans today to discuss payroll tax cuts and other possible relief programs after watching the global financial markets meltdown and seeing the S&P 500 suffer its worst day since the financial crisis. These would be in addition to the $8.3 billion-dollar spending package announced last Friday to support vaccine research and help combat the outbreak. The market response to the news has been positive, with the US dollar strengthening and US stocks and bond yields reversing some of yesterday’s losses.
NZ Business Confidence Takes A Hit
Yesterday’s ANZ business outlook survey showed confidence falling to its lowest level since 2009. The survey showed a net 53% of businesses expect general conditions to worsen in the year ahead. This compares with February’s full month survey where pessimism was just 19%. In other local news, yesterday’s speech from RBNZ Governor Orr made clear that the Bank has no immediate intention in resorting to unconventional monetary policy. He indicated that the next assessment of the OCR will be on March 25th, suggesting that the Bank is unlikely to deliver a surprise cut before that date.
The Day Ahead
More volatility expected as coronavirus news and developments remain mixed.
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