NZ dollar holds its breath for coronavirus news

ASB Bank is expecting the coronavirus crisis to knock about 0.6 per cent off GDP in the March quarter. Photo / Bloomberg

The New Zealand dollar was little changed from its New York close on Friday as investors awaited further news on the coronavirus crisis.

The kiwi was trading at 64.06 US cents at 5pm from 64.02 cents in New York while the trade-weighted index was at 71.17 from 71.21.'

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"It's hard to get too enthusiastic about the New Zealand dollar, or any risk asset at the moment for that matter, given we're just one major coronavirus headline away from potentially having the rug pulled out," said Mike Shirley, a dealer at Kiwibank.

The latest news from China is that 908 people have died in the outbreak and that 40,171 people have been infected.

The currency had dropped from Friday's local close at 64.56 US cents as sentiment towards risk assets deteriorated and US non-farm payrolls data was much better than expected.

Shirley said the market is also a little wary with some major data and events scheduled for this week.

Higher than expected Chinese inflation data — it came in at a 5.4 per cent annual pace compared with expectations of 4.9 per cent — briefly buoyed the New Zealand dollar, taking it to the day's high at 64.18 US cents before deflating again.

The biggest event locally will be the Reserve Bank's monetary policy statement on Wednesday afternoon.

While the market is expecting no change in the official cash rate from its 1 per cent current level, it will be paying attention to the central bank's comments on the likely economic impact of the coronavirus.

Earlier today, ASB Bank said it expects the virus will shave about 0.6 per cent off GDP in the March quarter. "Viral outbreaks typically result in a sharp, but relatively brief, shock to both the NZ and global economies," it said.

The dollar was at 95.61 Australian cents from 96.06 cents here on Friday. It was at 49.67 British pence from 49.89, at 58.49 euro cents from 58.79, at 70.30 yen from 70.96 and at 4.4770 Chinese yuan from 4.5065. The two-year swap rate fell to a bid price of 1.0900 per cent from 1.1367 on Friday while 10-year swaps were at 1.4100 per cent from 1.4800. BusinessDesk