March 16, 2020 — 3 min read
The AUDUSD opens at 0.6123 and the NZDUSD opens at 0.6061 this morning.
It was a volatile day yesterday, with the Reserve Bank of New Zealand cutting the OCR by 0.75%, closely followed by the Fed cutting interest rates by 1%.
The Australian Dollar is having a hard time of it, with its big move down against the New Zealand Dollar, reaching a low of 1.0016 and getting very close to parity.
New Zealand appears to be reacting swiftly and decisively, and the Government is releasing a fiscal package at 2:00 PM NZST today which will be closely watched.
Australia has its Monetary Policy Meeting Minutes out at 11:30am. The Reserve Bank of Australia’s meeting 2 weeks ago feels like a lifetime ago, and by all means these minutes should be disregarded as out of date and irrelevant. There is a worry though that there will be a knee jerk reaction on a headline of the RBA appearing to be downplaying Coronavirus, and not taking it as seriously as others.
There is a slew of news of countries closing borders, schools, etc. As travel dries up the cost of closing borders drops, and becomes an easier decision for governments to make. What the world will focus on very closely is the rate of growth in new cases. We have seen Chinese cases peak, then drop off in in a circa 4 week cycle. Even if Italian cases increase, if the rate of that increase starts to slow, then we may be in the very early stages of getting a handle things. Countries will have a blueprint to stop it. Close the borders, send everyone home, stimulate and make sure people can afford to get through it. Still a very good chance for it to get worse before it gets better, but there may well be a tiny light at the end of a very long tunnel.
We have US Retail sales overnight, but data is either going to be bad, or if it’s good out of date, so in the near term a grain of salt with the figures will be warranted.
Global equity markets are back down, Dow -9.2%, S&P 500 -8.9%, FTSE -4.0%, DAX -5.3%, CAC -5.8%, Nikkei -2.5%, Shanghai -3.4%.
Gold prices dropped -2.5% to USD$1,491 an ounce. WTI Crude Oil prices are off 9% again US$28.8 per barrel.
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