Markets plunged into panic mode once again as coronavirus developments escalated yesterday and overnight. Measures being taken to stop the spread of the virus look likely to send the world into a global economic recession. The sharp decline in risk appetite has seen high demand for US Dollars which always performs well during times of crisis. The NZD and AUD have both fallen sharply on the back of the rising USD.
US Bans Travel From Europe
Market turmoil was kicked off yesterday afternoon when President Trump addressed the nation announcing he would suspend all travel into the US from Europe (excluding the UK) for the next 30 days.
No Move From ECB
The Euro lost ground overnight as the ECB decided not to cut rates. Other policy measures announced to help prop up the economy left markets underwhelmed, suggesting that the bank has few tools at its disposal after years of stimulus measures already.
Pressure Now on RBNZ
The chances of a 50bps cut in the OCR have increased, with pressure mounting on the RBNZ to take action on or before their next scheduled decision on March 25th.
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