Kiwi wobbles as the market seeks haven assets

Key Movers

The Great British Pound touched one week highs against the USD despite a broader risk off mood. Expectations of an immediate out of cycle Bank of England monetary policy adjustment faltered through trade on Thursday after incoming and newly appointed Governor Andrew Bailey advise lawmakers in Westminster the MPC (monetary Policy Committee) intended to wait until it had more data and clarity surrounding the broader impact of the coronavirus before lowering interest rates. Pushing through 1.2950 sterling touched intraday highs at 1.2966, while edging higher against the Euro. Despite the upturn the Pound remains vulnerable to further downward corrections as markets continue to price in an interest rate adjustment later this month and at least a 50 basis point reduction by year end. As talks been the UK and EU begin to fracture a spreading coronavirus could push Britain into a recession, prompting more drastic monetary policy measures. Despite the flight to safety and broader risk off overtone the USD edged lower through trade on Thursday as markets priced in additional Federal Reserve interest rate adjustments. Having already cut interest rates by 50 basis points earlier this week money markets began pricing in an additional 25 basis point cut for the fed’s next meeting on March 18 and a possible further 25 basis point cut in April. The dollar tumbled against the Japanese Yen moving toward 5 months lows and falling below 107 to touch 106.70. With non-farm payroll data the headline macroeconomic item on the agenda today, investors will be looking for sustained strength across the labour market as bastion of stability in the face of broader coronavirus uncertainty.