- The NZD / USD recovery attempt fails at 0.6050 and the pair falls to 0.6000.
- Kiwi losses increased after the RBNZ’s conciliatory statement and comments from Fed Powell.
- The New Zealand dollar could fall to 0.5700 in the coming months – Rabobank.
The New Zealand dollar lost ground on Wednesday, weighed in by a conciliatory statement from the Royal Bank of New Zealand and the strength of the US dollar after Fed Powell’s speech. The weak recovery attempt seen during the European trading session was capped at 0.6050, and the pair fell again, returning to a handful of pips above 0.6000.
Kiwi Dives To Comments From Fed Powell And Dovish RBNZ
The NZD / USD was weighed in by Powell’s comments rejecting the possibility of negative interest rates and warning of a lasting recession caused by the coronavirus pandemic. Powell’s speech further weakened the dollar, damaging the risk appetite.
Earlier in the day, the Kiwi fell against its main rivals after the RBNZ suggested the possibility of using additional monetary tools to support economic recovery. The Bank has announced its intention to double its quantitative easing program and introduce negative interest rates if necessary.
NZD / USD: risk of plunging to 0.5700 – Rabobank
On a larger image, the FX analysis The Rabobank team sees the New Zealand dollar vulnerable and warns against a decline to 0.5700: “We see risks of a decline towards NZD / USD 0.57 on a view of 3 to 6 months. This implies an intensification of tensions between the United States and China in the run-up to the American presidential election and an associated increase in the rate of Chinese growth. “