NZD/USD, NZD/JPY, Trans-Tasman Bubble, Tourism, New Zealand Economy

THIS WEEK IN THE FOREX MARKETS

NZD/USD, NZD/JPY, Trans-Tasman Bubble, Tourism, New Zealand Economy

The New Zealand Dollar may come under pressure in the coming weeks as Covid-19 cases surge in Australia, threatening the implementation of the trans-Tasman travel bubble.

It’s no secret that tourism is a major driver of the New Zealand economy and with international borders closed, the introduction of a travel bubble with Australia had been flagged as a potential remedy.

However, the inability to successfully supress the novel coronavirus in Australia has temporarily suspended the planned travel measures, leaving New Zealand Deputy Prime Minister Winston Peters “awfully frustrated” at Australian Prime Minister Scott Morrison for allowing “this thing to get out of control in my view”.

With tourism accounting for roughly $16.2 billion and contributing roughly 9.8% to GDP, it is understandable that the Deputy Prime Minister believes a moderated version of the trans-Tasman bubble may still be a possibility soon stating, “we used to fly between our two countries and states in the 1990s [and] we can do it again”.

Having said that, the implementation of this much-desired program looks to be highly unlikely given the current state of health outcomes in Australia with Victoria, Australia’s second most populous state, recently mandating the use of face masks in response to a record-breaking surge in Covid-19 cases.

To that end, the trade-sensitive New Zealand Dollar may struggle against its major counterparts as the tourism industry continues to be hampered by regional coronavirus concerns. Read more...