As the world remains on the brink of a pandemic amid the persistent spread of the covid-19 coronavirus, the strength of the New Zealand dollar has dwindled. With the majority of the headlines surrounding the virus containing negativity, the struggling, risk-correlated currency has had little to rally on. Until the risks of the viral epidemic become well contained, NZD is expected to remain cautious about its outlook. Meanwhile, the UK is preparing itself for the start of its EU-UK negotiations today. With rising tensions between the two parties, the road ahead is expected to be bumpy. The coronavirus hasn’t skipped the UK either, with confirmed cases springing up across England, sterling has taken a hit as fears concerning the virus rose over the past week.
NZD plummets as world goes into state of panic surrounding the coronavirus
The story has been much of the same for the New Zealand dollar for a number of months now since the outbreak occurred in Wuhan, China. Since the outbreak, the disease has spread across the globe, with Europe and the US now being hit by confirmed cases of the disease. As a risk-sensitive currency, NZD has dropped as markets lost confidence in risk-correlated currencies across the board, causing a ‘risk-off’ mood.
Looking ahead to the new trading week, the exchange rate markets will remain fixed on the spread of the coronavirus. If pandemic fears continue, the New Zealand dollar could slide against the pound. GBP traders looking to purchase NZD could find a window of opportunity in the dollar’s virus weakness as fears are expected to continue. The currency could fall further in the week however if the NZ January building permits show a decline. Should this be the case, NZD will drop.
Steeling to remain under pressure from virus but economic data could boost currency
Today marked the release of the UK’s first in a series of data releases for this week. At 09:30 GMT the Markit manufacturing Purchasing Manager’s Index (PMI) for February was released. The market had expected a figure of 51.8 from 51.9, but today’s figure revealed a disappointing 51.7. This was a 0.2% drop which will do little to boost GBP, but the economic releases are still plentiful which will offer the currency several chances to rally throughout the week. The UK’s less important mortgage data was also released today which showed some signs of positivity with upticks in consumer credit, M4 Money Supply (the measure of notes and coins in circulation) and Mortgage Approvals data.
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