- The liquidation of the NZD / USD continues after the comment of the governor of the RBNZ, “Everything you need”.
- The Kiwi fell on average support for 50 days.
- The RBNZ has asked banks to prepare for negative rates by the end of 2020.
The NZD / USD prolongs post-RBNZ losses following accommodating comments from Governor Orr.
The currency pair is now trading at session lows close to 0.6020, which represents a drop of 0.80% on the day, after going from 0.6137 to 0.6030 following the decision of the Reserve Bank of New Zealand on rates.
Governor Orr was out of the wire a few minutes before press time, saying the central bank would do whatever it takes to support the economy. Meanwhile, decision maker Bascand said commercial banks should prepare for negative rates by the end of the year.
While the central bank maintained the official exchange rate at 0.25% on Wednesday, it extended the bond purchase program to $ 60 billion from $ 30 billion. More importantly, the central bank said negative rates could become an option in the future, validating Westpac’s forecast for rates below zero by November.
With the RBNZ reinforcing negative interest rate expectations, the NZD is likely to suffer further declines in the short term.
At the time of publication, the pair is flirting with average support at 50 days at 0.6019. Acceptance below this support would expose the low of 0.5994 created on May 7. A close below this level would confirm a change from upward to downward trend.
On the upper side, a fence above the trend line connecting Jan. March 2 and 9 summits are required to put the bulls back in the driver’s seat.