We have recently changed our Fundamental bias on the NZD to bullish due to an improvement in the domestic and monetary policy outlook.
However, in the short-term, the NZD has been pressured due to the increased risks and fears of contagion from the lethal Coronavirus.
As far as viruses go, the SARS outbreak in 2003 only shaved off about 0.1% from New Zealand’s GDP. But, it’s important to remember that back 2003 New Zealand only sent 5% of their exports to China which has recently increased to 28% as of 2019.
Thus, the economic risks that the virus pose is a real threat and something that’ll be on the RBNZ’s radar.
In terms of data, this week we get the Q4 Jobs Report and quarterly inflation expectations for New Zealand, both of which can create some tradable short-term volatility.
This week ahead video will help you prepare for this week’s upcoming event and provide insights into how you could possibly trade it as well.
Highlights of the video:
01:42 – Baseline context for the GBP
04:41 – Baseline expectations for the upcoming risk event
06:48 – Possible sentiment shifts
09:52 – Possible currency pairs to consider