New Zealand’s government coronavirus wage subsidy plan may now cost as much as NZ $ 12 billion and the government is making modifications to the plan, Finance Minister Grant Robertson said on Friday. 

Key quotes

The pandemic has moved fast.

the Government will make further moves to cushion the impact from businesses.

The current sick leave scheme is being folded into the wage subsidy scheme to prevent “double-dipping”.

The scheme is being run in a “high trust model”.

Employers are still expected to pay their employers 80% – but all workers now must receive the full value of the subsidy. 

Citing sources familiar with the discussion, Reuters reports that there is ‘at least’ one Republican member, who may act to delay the House vote on the US coronavirus relief bill into the weekend. 

House of Representative Leader has urged all members of the House not to do anything to delay the vote. 

Earlier today, it was reported that the House set two hours of debate on coronavirus aid bill Friday beginning at 1300 GMT.

On Thursday, the Senate cleared the $2 trillion rescue package to fight the virus’s impact on the economy by 96-0 voting.

  • US Pres. Trump: Could open up farm belt, parts of the mid-West, ‘other places’
  • Gold’s immediate outlook is neutral with prices stuck in a sideways trading range. 
  • The next move depends on the direction in which the range is breached. 

Gold is currently trading at $1,624 per ounce, representing a 0.30% decline on the day.

Despite the losses, the yellow metal is still trapped in a trading range defined by the consecutive daily candles with long wicks and small bodies created on Wednesday and Thursday.

A break above Thursday’s high of $1,645 would imply the period of indecision has ended with a bullish breakout and could cause more buyers to join the market, yielding a rise toward resistance at $1,675.

Alternatively, acceptance under Thursday’s low of $1,594 would confirm an end of the bounce from recent lows near $1,455.

The outlook will remain neutral as long as prices hover within Thursday’s trading range.

Daily chart

Trend: Neutral

Technical levels

 

  • AUD/USD holds onto recovery gains amid broad US dollar weakness.
  • The coronavirus pandemic takes the toll on the greenback, RBA continues on its pledged liquidity infusion.
  • China’s Industrail Profits slump.
  • Trade sentiment remains sluggish in wait for the House voting on the US COVID-19 Bill.

While extending its five-day winning streak, AUD/USD takes the bids to 0.6100 during the early-Friday trading session. The pair benefits from the broad US dollar weakness amid mostly positive risk-tone despite coronavirus (COVID-19) fears. Today’s US House voting on the coronavirus relief package will be the key to watch.

The Aussie traders paid a little heed to the record drop in China’s Industrial Profits, down 38.3% YoY, for January-February. The reason could be traced from the US dollar weakness. The US dollar index drops to the fresh low in seven days to 99.22 by the press time.

The US is now ahead of China as far as the virus numbers of infected people, above 81,000, are concerned. Even so, US President Donald Trump cheers the Gilead Remdesivir and others.

The Republican leader, in his Coronavirus Task Force Briefing, told that he will be talking to China’s President Xi Jinping about the virus during his call at 02:30 GMT.

The US Senate passed a $2 trillion aid package the previous day and there is likely debate over the same around 10:00 GMT before pushing it to the lower House for final voting.

 It should also be noted that the US Michigan Consumer Sentiment figures for March, expected 90.00 versus 95.9 prior, may offer additional volatility to the pair.

Though, the major attention will be given to the political plays as well as coronavirus data for near-term direction.

Technical analysis

Unless marking a daily closing below the 10-day SMA level of 0.5935, the pair is likely rising further towards 21-day SMA, at 0.6235 now.

 

The Guardian News Paper has reported that the “planned negotiating rounds on the UK’s future relationship with the EU have been abandoned as a result of the coronavirus pandemic, with Boris Johnson’s government still to table a comprehensive legal text for both sides to work on.”

Key notes

  • During a European commission briefing on Thursday, envoys for the EU capitals were told that holding negotiations via video-conferencing had so far proved impossible.
  • The two sides are trying to find a way to maintain dialogue in the coming weeks and months to kickstart the talks, but a previous schedule for negotiating rounds, with weeks set aside for consultation and preparation, has been ditched.
  • The fact that the UK was still to table a legal text added an extra layer of difficulty, EU sources said.
  • The European commission published a 441-page draft treaty on 13 March that covers every aspect of the future relationship. The UK left the EU on 31 January and has until the end of the year to negotiate a new economic and security relationship or face trading on WTO terms with large tariffs on goods.
  • Despite Downing Street’s public insistence that a similarly comprehensive text would be tabled earlier this month, EU sources said the UK had tabled only four documents covering trade, transport, aviation and nuclear cooperation. London has not tabled legal text on significant issues including security cooperation or fisheries, and nor has it made its texts public.
  • EU sources also said the UK’s positions in the texts were in a “different galaxy” to those of Brussels.

FX implications

  • EUR/GBP’s charting a support structure, bulls look for parity
  • NZD/USD probes the four-day winning streak.
  • Weekly rising support line, 38.2% Fibonacci adds to the downside barriers.
  • 61.8% Fibonacci retracement holds the key to a mid-month top.
  • Nearly overbought RSI favors pullback.

Having surged to the eight-day top the previous day, NZD/USD steps back from 100-bar EMA to 0.5960 during the Asian session on Friday. Even so, the pair remains above 50% Fibonacci retracement of its March 09-19 declines.

In addition to the 100-bar EMA, nearly overbought RSI conditions also increase the odds to the pair’s pullback below 50% Fibonacci retracement of 0.5960 to the one-week-old rising trend line, at 0.5835 now.

If at all bears fail to respect the support line, the return of 0.5600 on the charts can’t be ruled out.

Meanwhile, buyers remain hopeful to confront 61.8% Fibonacci retracement level of 0.6075 once they overcome the 100-bar EMA level of 0.5975.

Following that, the mid-month highs surrounding 0.6150 will be on the bull’s radars.

NZD/USD four-hour chart

Trend: Pullback expected

 

Japanese Economy Minister Yasutoshi Nishimura has stated that job offers are plunging with the job and household income conditions souring rapidly due to the COVID-19 impact. The job market had been a rare bright spot in a weakening economy, but the Economy Minister said it was taking a hit from the rapidly spreading coronavirus pandemic.

“Job offers are plunging recently. Job and household income conditions, which had been very good up until now, are also souring sharply,” Nishimura told parliament.

Market implications

On the heels of the Tokyo summer Olympics being pushed back to 2021, Japan’s capital on Thursday reported an unprecedented number of new coronavirus cases with 
47 cases of the infection which was the biggest number in a single day. This follows 41 cases yesterday, triggering concern that the virus is rampant in the country. This complicates the risk-on sentiment in markets, although for now, traders are cheering the stimulus packages and cheap money supply in the system. 

  • Wall Street Close: US benchmarks were rallying hard on Thursday, cheering stimulus

 

  • USD/MXN fell for a third straight day on Thursday, confirming Peso’s longest daily winning run since mid-February. 
  • Technical studies suggest scope for further gains in the recently battered Peso. 

Mexico’s Peso jumped 4% against the US dollar on Thursday, having gained 2% and 3.69% on Tuesday and Wednesday, respectively. The three-day winning streak is the longest since Feb. 14 

The sharp pullback in USD/MXN from the record high of 25.4590 registered on Tuesday to a low of 22.8617 seen early Friday has put the bears back into the driver’s seat. 

The 14-day relative strength index has rolled over from the overbought or above-70 territory, signaling scope for a deeper pullback and the 5- and 10-day averages look set to produce a bearish crossover. The MACD histogram, which is used to identify trend strength and trend changes, is about to cross below zero in favor of the bears. 

As a result, a drop to 22.00 cannot be ruled out. For outlook to turn bullish, the spot needs to end Friday above Thursday’s high of 22.2484. The resulting bullish engulfing candle will likely allow a re-test of recent highs. 

The Mexican Peso fell from 18.55 to 25.4590 in the four weeks to March 24 as the coronavirus pandemic triggered recession fears and the Saudi-Russia oil price war fueled a sharp drop in the black gold, which is Mexico’s key export. 

Daily chart

Trend: Bearish

Technical levels