The total number of detected COVID-19 infections worldwide has exceeded 30 million. The number of deaths is approaching 1 million, and the number of daily cases is beating records of over 300 thousand. As a result, the WHO alerts that the weekly increase in new cases in Europe is greater than at the beginning of the epidemic in March.
The increasingly rapid spread of the epidemic before the autumn-winter season seems to realize the worst-case scenario drawn up by epidemiologists and may cause fears among investors. Another complete lockdown seems unlikely, but limiting the gathering, staying in public places becomes quite likely. Such regulations are being reintroduced by Germans or the British, and soon maybe the rest of Europe as well. This in turn may hit the service sector again.
Despite these risks, the central banks that made their decisions this week - the American Fed, the British Bank of England, the Bank of Japan and the Monetary Policy Council of Poland - have not decided to introduce new measures or expand their current programs. It seems that investors felt disappointed by the lack of these measures, which probably translated into a reversal of the stock indexes. Nevertheless, the market may still await further development in connection with the stimulus package, as Republicans and Democrats have not yet agreed on a new relief package.
Meanwhile, the New Zealand dollar has reached its highest level in 17 months on the currency market. One of the factors that could be supportive of the NZD seems to be the statements of Finance Minister Grant Robertson. He said that the economy is recovering strongly after a record recession. Robertson added that the central bank could take into account the scale of the rebound in the economy by deciding to introduce negative interest rates. In addition, there has not been a single COVID-19 case in New Zealand recently.
It is worth adding that the NZD/USD has strengthened by 24 percent in relation to the USD since the March low. The last time such a percentage scale of NZD/USD exchange rate increases took place was after the financial crisis since 2009.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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