Yahoo Finanza AUD/USD and NZD/USD Fundamental Daily Forecast – No Fundamental Reason to Stop Selling or Begin Buying Yet
Sellers continue to pound the Australian and New Zealand Dollars on Friday as fears over the ongoing coronavirus outbreak in China continued to weigh on investor sentiment. The Aussie is currently in a position to challenge its October 2 bottom at .6671. The Kiwi is trading at its lowest level since December 2.
At 10:10 GMT, the AUD/USD is trading .6687, down 0.0036 or -0.53% and the NZD/USD is at .6457, down 0.0034 or -0.52%.
The Forex pairs are both down as concerns about the economic impact of the disease outweigh the World Health Organization’s (WHO) confidence in China’s response to the new coronavirus.
WHO Declares Global Emergency While Praising China’s Response
The WHO said late on Thursday that the coronavirus outbreak was a global emergency, but opposed travel restrictions and said China’s actions so far would “reverse the tide” of its spread.
The WHO’s assured tone was enough to pause a rush into safe-haven assets that has for two weeks pounded Asia Pacific stocks and hammered currencies and commodities exposed to China.
Coronavirus Update
The death toll in China has now reached 213 and the number of cases is 9,692 – up from 7,711 a day ago. It has spread to 18 countries.
“While the WHO does not recommend a travel and trade restriction, the impact on China’s economy is likely to materialize gradually, which will yield an international impact as China plays an essential role in the global supply chain,” Commerzbank economist Hao Zhou said.
Despite the WHO’s recommendation several airlines are suspending flights into China. They include Air France, British Airways, Air Seoul, Egyptair, Lion Air, Lufthansa, Swiss Airlines and Australian Airlines.
Out of the U.S., American Airlines suspended flights from Los Angeles to Beijing and Shanghai from February 9 to March 27. Delta Airlines is reducing flights to 21 a week from 42, from February 1 to April 30.
Additionally, the first two coronavirus cases have been confirmed in Italy, according to the country’s health ministry, adding that they are Chinese tourists.
In a statement Friday, England’s Chief Medical Officer Chris Whitty confirmed that the patients were now in the care of the country’s National Health Service (NHS). A day earlier, India and the Philippines confirmed their first cases.
China Manufacturing Activity in Line with Expectations
Growth in China’s factory activity faltered in January, an official survey showed, as export orders fell and an outbreak of a new virus added to risks facing the world’s second-largest economy, Reuters reported.
The Purchasing Managers’ Index (PMI) fell to 50.0 in January from 50.2 in December, China’s National Bureau of Statistics (NBS) said on Friday. The reading was in line with analysts’ forecasts and hit the neutral 50-point mark that separates growth from contraction on a monthly basis.
While the PMI showed activity in some parts of the sector holding up, economists are doubtful the survey provides a meaningful read on the economy given recent developments with the coronavirus and distortions from the Lunar New Year break.
“I would disregard today’s release,” said Raymond Yeung, Chief Economist for Greater China at ANZ, in an email to Reuters.
“The figure certainly overrates the economic outlook as it does not reflect the interruption due to the outbreak,” he said.
Daily Forecast
Other than aggressive speculators stepping in front of the heavy selling pressure in an effort to pick a bottom, I see no reason to buy the AUD/USD and NZD/USD as long as the virus continues to spread and the death toll increases in China.
The economic impact is still an unknown, but it’s likely to worsen over the near-term. Furthermore, we could start to hear warnings from Reserve Bank officials in Australia and New Zealand about the state of their economies due to their exposure to China.
This article was originally posted on FX Empire
