The New Zealand Dollar has dropped to new lows against the Swiss Franc, falling below 0.615 cents and continuing on a downward trend.
The Franc is now stronger against the Kiwi Dollar than the USD. Historically the Dollar and the Swiss Franc have traded very close to 1:1, so this change shows that the Franc has strengthened in response to recent news events.
With continued global uncertainties, it’s no surprise that investors are flocking to safe haven assets, and the Franc is traditionally considered more of a safe haven currency than the greenback. And with the coronavirus only expected to worsen across the world at this rate, the Swiss Franc is also expected to only increase in value. And in response, the NZD looks to fall further as well.
In its monetary policy statement released earlier this month, the Reserve Bank of New Zealand acknowledged the coronavirus outbreak as an emerging risk. While at the time they assumed that it would only pose a short-term impact on the economy, they still expected it to impact some sectors significantly, such as the agriculture and tourism industries.
In other news, the US Stock market had a slight rebound overnight, but quickly fell back down to its previous low. US President Donald Trump accused the media of fearmongering and causing the stock market drop so heavily, by exaggerating the severity of the coronavirus. This statement was most likely in response to the US Center for Disease Control and Prevention warning Americans to brace for significant disruption once the coronavirus entered the US in earnest.
Trump also tried to downplay the virus by stating that the number of cases in America was only “down to about 10”, even though the current number of confirmed cases in the US is 53. He also claimed that they were “very close to a vaccine”, although a White House correspondent later corrected that Trump was referring to the Ebola vaccine.
Anish Lal at BlackBull Markets gave the following statement in regards to the NZD/CHF falling to the downside:
“NZD/CHF is now entering a key support level, approaching lows from mid-2015 sub 0.6150. The Swiss Franc has gained in strength greater to that of the US Dollar, against both the Australian and New Zealand Dollar. This is probably because the Swiss Franc is deemed as a safe-haven or a hedge to global risk. Should bears seek to break the 60-cent mark, puts in play a key low from July 2015, following a flash crash to 55 cents at that time.”