Japanese Yen, New Zealand Dollar, Australian Dollar, Coronavirus – Asia Pacific Market Open
- Japanese Yen soars as China revises method for counting coronavirus, cases surge
- Dominant downtrend in New Zealand Dollar still holds despite a less-dovish RBNZ
- Australian Dollar prices at risk with S&P 500 futures pointing noticeably lower
YEN GAINS AS CHINA REVISES METHOD FOR COUNTING CORONAVIRUS, CASES RISE
The anti-risk Japanese Yen is gaining in early Thursday Asia trade after China revised the method for counting coronavirus cases, resulting in an additional 14,840 confirmed reports in Hubei. This is as the pro-risk Australian Dollar and similarly-behaving New Zealand Dollar are depreciating with S&P 500 futures pointing noticeably lower. Sentiment-linked crude oil prices are down with anti-fiat gold prices on the rise.
The focus for foreign exchange markets will thus likely be on risk trends as the new day gets going. Investors have been largely brushing off concerns about the impact of the Wuhan virus on global growth as of late and follow-through is not a guarantee at this point. The Australian Dollar may look past commentary from RBA Governor Philip Lowe who is due to speak at a panel.
S&P 500 Futures, AUD/USD, USD/JPY Dip Amid Surge in Wuhan Virus Cases
Chart Created Using TradingView
US Session Wrap – New Zealand Dollar, RBNZ, Crude Oil Prices
The New Zealand Dollar was the best-performing major currency on Wednesday as the Euro closed at its lowest since 2017 following softer regional industrial production. A neutral RBNZ monetary policy announcement largely dashed hopes of near-term easing, sending local government bond yields higher and thus NZD/USD. Overnight index swaps are now pricing in just a 37.4% chance of a 25-bp cut by November.
Market improved as investors brushed off concerns about the impact of the coronavirus on global growth which is now at risk. The S&P 500 and Dow Jones closed 0.65% and 0.94% higher respectively. This did not bode well for the anti-risk Japanese Yen. The sentiment-linked Australian Dollar and similarly-behaving New Zealand Dollar received a boost. These dynamics lead to NZD/USD’s best day since December as it rose over 1%.
Sentiment-oriented crude oil prices also received a boost and looked past weaker demand growth estimates from OPEC due to the Wuhan virus. The Canadian Dollar followed the commodity to the upside, extending the decline in USD/CAD following bearish technical signals. Crude is a key source of revenue for Canada and can impact the trajectory of monetary policy expectations, resulting in CAD volatility.
New Zealand Dollar Technical Analysis
Despite the RBNZ and with the Wuhan virus back in focus, the dominant downtrend still holds in my majors-based New Zealand Dollar index. That is being maintained by falling resistance from late December – pink line on the chart below. Downtrend resumption entails taking out the January low after prices cleared rising support from October.
| Change in | Longs | Shorts | OI |
| Daily | 1% | 0% | 0% |
| Weekly | 34% | -25% | 6% |
Majors-Based New Zealand Dollar Index
Chart Created Using TradingView
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
