Despite the bullish comments from RBNZ, the fear of coronavirus impacting the economy will keep investors cautious. Short NZD/USD?

RBNZ kept official cash rates unchanged at 1.00% as widely expected.

However, what surprised the market was the optimism from RBNZ who said that they are done with easing unless the coronavirus situation worsens.

The surge in coronavirus cases in Hubei has seen the market switch from the previous neutral to a risk-off sentiment which is weighing on NZD.

We believe that the uncertainty will stem previous optimism that the disease might be peaking.

RBNZ optimism might falter in the near future as the coronavirus could weaken the global economy, including New Zealand’s.

NZD/USD could continue to head lower towards the 0.6200 price level.