# Kiwi hit by new virus case; souring risk sentiment supports yen, Swiss franc
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-08-17
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Market Analysis: NZD Falls on COVID-19 Case, AUD Slips on
Meta Description: Stay updated on the latest market trends as New Zealand and Australian dollars react to pandemic developments and central bank policies.
URL: https://financedigest.com/kiwi-hit-by-new-virus-case-souring-risk-sentiment-supports-yen-swiss-franchtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-08-17t012627z1lynxmpeh7g01crtroptp4global-forex-1-1736838013612-compressed.jpg)

By Hideyuki Sano

TOKYO (Reuters) – The New Zealand dollar tumbled on Tuesday after the country discovered its first community case of COVID-19 in six months while the Australian dollar slipped to a one-month low as minutes from the central bank meeting were perceived as dovish.

Safe-haven currencies such as the yen held firm against riskier currencies also on growing anxiety the spreading Delta variant of the coronavirus could disrupt, if not derail, the global economic recovery from the pandemic.

The New Zealand [dollar fell 0.7% to $0.6972 after the virus-free country found a community outbreak of COVID-19 for the first time since](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") February.

The news came just a day before the country’s central bank, the Reserve Bank of New Zealand (RBNZ), is widely expected to become the first among developed countries to raise interest rates [since the pandemic as its economy](https://www.financedigest.com/euro-zone-economy-sentiment-rises-in-dec-first-time-since-start-of-ukraine-war.html "Euro zone economy sentiment rises in Dec, first time since start of Ukraine war") booms.

While analysts still expect the RBNZ to go ahead with a 25 basis point [rate hike](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike") on Wednesday, the currency’s overnight indexed swaps showed implied probabilities of a rate hike fell below 90% from more than 100% priced in before the news.

The Australian [dollar lost 0.4% to $0.7308 after the minutes from the Australian central bank’s last policy meeting](https://www.financedigest.com/sterling-steadies-vs-dollar-ahead-of-boe-ecb-meetings.html "Sterling steadies vs dollar ahead of BoE, ECB meetings") were perceived to be more dovish than some had anticipated.

The minutes showed the Reserve Bank of Australia (RBA), which surprised [markets by sticking to its plan to start tapering bond](https://www.financedigest.com/britains-bond-market-turmoil.html "Britain’s bond market turmoil") buying, would be prepared to take policy action, should coronavirus lockdowns across the country threaten a deeper economic setback.

The minutes seem to be in line with what Governor (Philip) Lowe has said earlier but perhaps [markets reacted to headlines like the outlook](https://www.financedigest.com/puma-confirms-full-year-outlook-flags-market-volatility.html "Puma confirms full-year outlook, flags market volatility") is highly uncertain,” said Teppei Ino, senior currency analyst at MUFG Bank.

Risk-averse [sentiment was rising also as weak economic data from the United States and China over the last few days has stoked worries](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") the spread of Delta variant could lead to a slower global recovery.

The New York Federal Reserve’s barometer of manufacturing [business activity](https://www.financedigest.com/euro-zone-business-activity-contracted-again-in-aug-outlook-bleak-2.html "Euro zone business activity contracted again in Aug, outlook bleak"), released on Monday, declined more than expected in August while the University of Michigan’s survey on Friday showing U.S. consumer sentiment [dropped sharply in early August to its lowest level](https://www.financedigest.com/optimism-levels-drop-to-low-of-17-percent-according-to-first-survey-since-banking-regulations.html "Optimism levels drop to low of -17 percent, according to first survey since banking regulations") in a decade.

In China, data published on Monday showed July retail sales, industrial production and fixed asset [investment were all weaker than expected](https://www.financedigest.com/uks-dominos-expects-tech-investments-to-hit-2023-profit.html "UK’s Domino’s expects tech investments to hit 2023 profit") as the latest COVID-19 outbreak weighed on the world’s second-biggest economy.

“Soft U.S. data could well prove transitory but at the moment more people are turning cautious and thus likely to reduce risk in their positions, rather than taking on more risks,” said Kazushige Kaida, head of FX [sales at State Street Bank’s](https://www.financedigest.com/gucci-banks-on-private-salons-for-the-ultra-rich-to-revive-sales.html "Gucci banks on private ‘salons’ for the ultra-rich to revive sales") Tokyo branch.

As investors tried to reduce risk, so-called safe-haven currencies, such as the yen and the [Swiss franc](https://www.financedigest.com/swiss-franc-grapples-with-safe-haven-identity-crisis-after-credit-suisse.html "Swiss franc grapples with safe-haven identity crisis after Credit Suisse"), gained a boost.

The yen has risen to around 109.28 yen per dollar, [holding on to gains](https://www.financedigest.com/oil-struggles-to-hold-gains-amid-mixed-demand-view.html "Oil struggles to hold gains amid mixed demand view") of about 1% made over the past two sessions until Monday.

Against the euro, the yen stood at 128.62 per euro, having [hit a near five-month high of 128.50 yen](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") on Monday.

The Swiss franc also held on to latest [gains at 0.9133 franc per dollar](https://www.financedigest.com/dollar-slips-yuan-gains-on-china-pmi-hot-inflation-lifts-euro.html "Dollar slips, yuan gains on China PMI; hot inflation lifts euro"). On the euro, it stood at 1.0745 franc to the euro, staying near its nine-month high of 1.0720 [set earlier this month](https://www.financedigest.com/german-bonds-set-for-worst-month-in-decades-as-inflation-hits-new-highs.html "German bonds set for worst month in decades as inflation hits new highs").

The U.S. dollar, which is also often seen as the ultimate safe-haven currency, held firm against many other rivals, including the [euro and most other currencies](https://www.financedigest.com/euro-having-a-laugh-a-quarter-of-brits-take-the-wrong-currency-on-holiday.html "Euro having a laugh: a quarter of Brits take the wrong currency on holiday").

The [euro eased](https://www.financedigest.com/asia-shares-ease-euro-slugged-by-energy-crisis.html "Asia shares ease, euro slugged by energy crisis") slightly to $1.1785, losing steam after hitting a one-week high of $1.18045 on Friday.

In cryptocurrencies, [bitcoin traded](https://www.financedigest.com/bitcoin-traders-can-now-trade-on-lows-and-highs.html "Bitcoin Traders Can Now Trade on Lows AND Highs!") at $46,449, not far from Saturday’s three-month high of $48,190. Ether stood at $3,195.

(Reporting by Hideyuki Sano. Editing by Gerry Doyle and Lincoln Feast.)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---