The Kiwi Dollar opens flat today, holding on to most of yesterday’s gains. Risk appetite has improved as markets took comfort that policy makers around the world were implementing economic stimulus measures, with more expected in the coming weeks. The US Dollar managed a small bounce back after yesterdays losses, helped by better than expected manufacturing data released earlier this morning. Also lending support to the USD was Joe Biden’s performance in the Democratic primary elections yesterday.
Central Banks Taking Action
The Bank of Canada became the latest central bank to cut its cash rate, by 50bps down to 1.25%. The BoC said “the outlook” is clearly weaker now than it was in January” The Bank of England is meeting on March 27th, with a 0.25% cut expected, although there is growing likelihood of a 0.50% cut. No move from RBNZ yet, and speculation of an early rate cut has not eventuated. A speech released yesterday mentioned again that the “next OCR decision is scheduled for March 25”, suggesting the RBNZ will wait until then before making its move.
Australian GDP Firm
Q4 GDP data released yesterday afternoon was better than expected, coming in at 0.5% quarter on quarter vs market forecasts of 0.3%. The Aussie made gains on the back of announcement which has seen the NZD/AUD cross rate move to the lower end of its recent range.
The Day Ahead
Not much on the data front, with coronavirus continuing to be the main factor driving markets. Yesterdays improvement in risk sentiment could be short lived as headlines of the virus spread are released.
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