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Kiwi Falls as Australian Dollar Hits 11 Year Low

Published February 27, 2020

Coronavirus continues to dominate global markets with risk aversion remaining firmly in place. Markets are reacting to each update on the virus’s spread, trying to estimate the potential financial impact of the disease on the global economy. Safe haven currencies and commodities remain well supported, while global equities are mixed after recent heavy falls.
The Australian Dollar has been particularly weak overnight falling to an 11 year low vs the USD, which has dragged the NZ Dollar lower. The Kiwi opens this morning around the US 63 cent level, after earlier falling to its lowest level since October.

Greenback Recovers from Two Week Lows

The US dollar is back up this morning after falling to two-week lows on expectations of rate cuts coming from the Federal Reserve. Yesterday’s comments from Vice Chair Clarida suggested the Fed is going to stay patient and monitor the economic impact closely before making monetary policy decisions. Even though money markets are pricing in multiple cuts for 2020, the dollar remains resilient as a safe haven play against its FX peers. There will be a lot of focus on US data to be released tonight.

The Day Ahead

Coronavirus will continue to be the main factor driving markets, with President Trump making an address later this morning as health officials warn it is only a matter of time before the virus spreads across the U.S. On the data front we have ANZ business confidence data this afternoon, which will be the first survey to capture the coronavirus impact. On the global front, the main focus will be on US Durable Goods and Q4 GDP numbers to be released overnight.