The Kiwi Dollar opens the day sharply lower as the US Dollar surged with investors looking for liquidity amid falling asset prices. US Dollars are is short supply pushing the currency higher, which has seen both the NZD and AUD fall below the 60 cent level. The NZD is lower on all major cross rates apart from the NZD/AUD which has continued its recent run towards parity. Overseas, attention is now moving from monetary policy and rate cuts, towards fiscal support measures, with the U.S expected to outline their plan later today.
NZ Government Delivers Fiscal Boost
The Kiwi Dollar received an initial boost after yesterdays $12.1 billion fiscal support package. The package is equal to around 4% of GDP and includes immediate wage subsidies, business tax relief, support for the aviation industry, increased benefit payments, and a $500 million cash injection to the health sector. The boost to the currency was short lived with the NZD giving back gains later in the day, before falling heavily overnight as the US Dollar rallied.
U.S to Announce Fiscal Support Plan
US Treasury Secretary Mnuchin said the US administration would outline its fiscal plan today, with press reports saying that it would be between $800b to $850b (4%/GDP), although it could yet grow larger.
U.S Retail Sales Slide
Data released overnight showed US retail sales unexpectedly fall in February, with households cutting back on purchases. The February number was down 0.5% vs January, compared to market expectations of a 0.2% rise. However the numbers are largely irrelevant given the coronavirus development of the past few weeks.
© Copyright - EncoreFX, 2018.The information in this post is provided for general information purposes only and has been prepared without taking into account any person’s objectives, financial situation or needs and, accordingly, it does not constitute personalised financial advice under the Financial Advisers Act 2008, nor does it constitute advice of a legal, tax, accounting or other nature to any person. Before acquiring any financial services or products from EncoreFX, you should consider the appropriateness of the information having regard to your own objectives, financial situation or needs. We recommend that investors seek advice from their usual adviser before taking any action. EncoreFX (NZ) Ltd is a registered Financial Services Provider (FSP 461386), and is a licensed derivatives issuer under the Financial Markets Conduct Act 2013. EncoreFX (NZ) Ltd has lodged a Product Disclosure Statement (PDS) for each of our derivatives with the Registrar on 21-Dec-2016. A copy of each PDS is available from us or from the Registrar at www.business.govt.nz/disclose.