The Kiwi Dollar has made ground overnight despite global risk appetite taking another dive as coronavirus concerns continued to spread. Italy, South Korea, and Iran reported sharp increases in coronavirus cases, which sparked a panic selloff in global equities and sent bond yields tumbling. Demand for US dollars, Japanese yen, and gold has surged as investors flock to safe-haven assets.
Markets Pricing In Fed Rate Cuts
Amidst the panic, Fed funds futures are now pricing in two interest rate cuts by the Federal Reserve in 2020. Although this could be a knee-jerk reaction by markets, it is worth keeping an eye on in the coming weeks as the coronavirus impact on the economy becomes clearer. The Fed has preached patience as of late, but markets are betting they will take action if the global economy takes a significant turn for the worst.
NZD Recovers After Weaker Than Expected Retail Sales
Worse than expected retail sales data released yesterday saw the NZD sold off before bouncing back overnight. Q4 sales grew by 0.7%, compared to 1.7% the previous quarter, and a touch lower than market expectations of 0.8% growth. While the Kiwi has shown positive signs overnight, any upside in the currency is likely to be capped while coronavirus cases continue to spread around the world.
The Day Ahead
Coronavirus developments will continue to be the main driver of markets On the data front there will be a lot of interest in US consumer confidence data to be released overnight.
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