NZD/USD drops 70+ pips below 0.6100 as RBNZ keeps rates at 0.25%, announces QE
- NZD/USD declines as RBNZ announced additional stimulus measures.
- New Zealand (NZ) PM Ardern warns over the tough times ahead, signals more investment.
- Trade war fears remain on the cards, risk of coronavirus (COVID-19) resurgence also loom.
- A speech from RBNZ’s Orr will be watched ahead of waiting for the Fed’s Powell.
NZD/USD slumps 70 pips to the intraday low of 0.6028, currently around 0.6050, after the RBNZ decision on early Wednesday.
Read: Breaking: RBNZ keeps OCR steady at 0.25%, expands QE size to NZD60 billion – Kiwi jumps
Statistics New Zealand (Stats NZ) recently came out with its provisional trade data for the period between February 1 and May 6. The outcome suggests, total exports to all countries were down 8.0% while total imports were up 3.5%. The data also showed that there was an increase in imports from China than the exports, which in turn suggests the virus effect.
Following that, New Zealand PM Jacinda Ardern mentioned that the nation is about to enter a very tough winter and signaled additional measures to combat the pandemic.
The Kiwi pair recently struggled amid the trade war worries and optimism surrounding the economic restart in New Zealand. While China’s fight is mainly with the US and Australia, it does flash worries for one of its trade partners and an ally to Australia.
Elsewhere, the surge in the virus cases from Germany and the epicenter Wuhan seems to renew the fears of another virus spread. The resultant moves also challenge the Kiwi nation’s re-opening.
That said, the market’s risk-tone sentiment remains heavy with the US bond yields and stocks in Asia-Pacific marking losses by the time of writing.
Traders may now await the RBNZ Governor Adrian Orr’s press conference, at 03:00 GMT, for further details. Following that, the Fed Chair Jerome Powell’s speech at 13:00 GMT will be important to watch.
Technical analysis
61.8% Fibonacci retracement of the pair’s drop between January and March, as well as 200-day EMA, respectively near 0.6265 and 0.6325. Meanwhile, an upward sloping trend line from early-April, at 0.5970 now, can keep the pair’s near-term declines limited.