The NZD/USD Falls on the RBNZ
Rowan Crosby • 1 min read
The NZD/USD was already weak headed into the RBNZ announcement today and the lift in asset purchases has seen a quick fall.
The RBNZ elected to leave the cash rate on hold for the time being, however, they did adjust the rate of the Large Scale Asser Purchase to above the 100bn range which was more than expected. And clearly the market has taken it has a negative sign for the NZD/USD.
There were some positive headlines to note, including the fact that the economy and employment are recovering faster than expected. However, the other side issue on that front, is that parts of New Zealand have gone back into lockdown thanks to some unknown cases of COVID.
Otherwise, it was a bit of a mixed bag and that’s what happened to the NZD/USD. Going in, there was a fair bit of downside risk, based on the big run-up and the mixed outlook. So it’s not surprising to see a sharp fall. That said, price has recovered a little off the lows so far.
The break through the 0.6600 level has already come this morning and as mentioned, price was looking soft going in.
Price did crash through 0.6550, before bouncing back and it is currently sitting in that region.
There is some chance we see some more falls towards the next key level of 0.6500, but at the same time, we’ve had a fair bit of volume take place in that 0.6550-0.6600 region as you can see on the charts, and that often leads to an area of consolidation.
A break under that 0.6500 region, would really be the next big bearish move. And I think a lot will depend on how the next few days plays out in Auckland, where the latest COVID cases have shown up.