February 26, 2020 — 2 min read
The AUDUSD opens lower at 0.6558 this morning, having establish a fresh 11-year low of 0.6552 overnight. The NZDUSD opens lower at 0.6302 this morning.
The coronavirus continues to dominate the headlines, as the virus and fear spread.
The US Center for Disease Control and Prevention urged Americans to prepare, and suggested a pandemic (defined as worldwide spread) was likely. In response, the World Health Organisation advised against classing the coronavirus outbreak as a pandemic and stated their belief the virus can still be contained.
Asia reported hundreds of new cases on Wednesday, while Turkish and Iranian currencies plunged on fears about the spread of the coronavirus.
In an attempt to limit the coronavirus contagion Japan’s Prime Minister called for all sports and cultural events to be cancelled or postponed for 2 weeks, and there is mounting concern that the Tokyo Olympics could be curtailed. Similarly, Dublin’s Ireland v Italy Six Nations rugby games been postponed.
Central Bank’s, including the RBA, are monitoring the economic impact of the virus and stand ready to cut interest rates to support growth. However, rates are already low which doesn’t much room until we get to more ‘unconventional’ policy responses.
There is considerable uncertainty about the depths and duration of the coronavirus’ negative global economic impact. Financial markets abhor uncertainty and this is likely to keep ‘risky’ assets such as equities and AUD on the back foot.
The EUR and JPY strengthened against the AUD and NZD overnight.
NZ Business Confidence numbers hit the wires today, followed by Australian quarterly Private Capital Expenditure figures.
Global equity markets swung between gains and losses throughout the day - Dow -0.2%, S&P 500 -0.1%, FTSE -+0.4%, DAX -0.1%, CAC +0.1%, Nikkei -0.8%, Shanghai -0.8%.
Gold prices fell 0.3% to USD$1,648 an ounce.WTI Crude Oil prices plunged a further 2.2% to US$48.73 per barrel.
Tune in for another medical, err, markets, report tomorrow!
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