- NZD/USD snaps four-day losing streak.
- Risk aversion, downbeat New Zealand data dominated off-late.
- RBNZ’s Orr favored the status quo, said the economy is in a good position.
- Coronavirus numbers from Hubei signaled a mixed picture.
NZD/USD pulls back from seven-day low to 0.6390 amid the initial Asian session on Wednesday. Mostly upbeat comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr and receding coronavirus numbers from the epicenter Hubei could be cited as the immediate catalysts. However, the broad risk aversion remains following the latest doubts on the actual figure and length of the epidemic.
RBNZ’s Orr: Good position
The RBNZ Governor Adrian Orr recently crossed wires while speaking in front of the committee in parliament to answer questions related to the Bank's annual report. The New Zealand central banker praised the present state of the monetary policy and economy while also suggesting a satisfactory position of inflation. With this, the odds of the RBNZ’s immediate rate cut decline. “Market pricing for RBNZ implies a 10% chance of easing at the next meeting on 25 March, with a terminal rate of 0.82% (RBNZ OCR currently at 1.0%,” mentions Westpac.
Read: RBNZ: Both the economy and monetary policy are in a good position
Coronavirus update: Numbers from Hubei fail to follow the recent declines
As per the latest figures from China’s Hubei, the epicenter of coronavirus, there are 1,693 new cases on February 18 versus 1,807 of February 17. The report also mentions 132 new deaths compared to 93 noted the previous day.
Read: Coronavirus peaking? How will it impact the global economies and FX?
Even so, the market’s risk-tone refrains to turn positive as the S&P 500 Futures stay mostly unchanged around 3,370.
Earlier, downbeat figures of New Zealand’s GDT Price Index, -2.9% versus 0.0% expected, contradicted the upbeat US data and broad US dollar strength to drag the kiwi pair downwards. It should also be noted that doubts over the coronavirus numbers and fears of global institutions like the International Monetary Fund (IMF) and the World Trade Organization (WTO) defied China’s readiness to cut tariffs of 696 US goods.
Moving on, a light economic calendar at home will keep the pair traders at the mercy of external factors with China, Australia and the US being the key drivers.
Technical Analysis
Any downside below the monthly bottom of 0.6377 can drag the quote to November 2019 low near 0.6315.
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