NZD/USD dips below 200-hour SMA on risk aversion
|- NZD/USD drops 0.23% in Asia after failing to break above 0.66 on Thursday.
- Risk-off action in the equity market bodes well for the safe-haven US dollar.
- Fed's balance sheet size drops below $7 trillion, could add to bearish tone around equities.
The NZD/USD pair is extending overnight losses with the US dollar continuing to draw haven bids amid losses in the equity markets.
Currently, the pair is trading near the 200-hour simple moving average at 0.6517, having printed a session low of 0.6546 soon before press time.
Risk-off
The US stocks dropped on Thursday as the continued spread of coronavirus threatened prospects of V-shaped economic recovery.
Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases said that states of Texas, Florida, and California, where cases are rising at a faster rate, should opt to pause reopening measures and rather go for a complete shutdown.
In addition, oil prices fell sharply, pushing the energy stocks lower and adding to bearish pressures around the broader equity markets.
At press time, the futures tied to the S&P 500 are flatlined, however, stocks in Japan, Australia, and South Korea are flashing red and keeping risk assets under pressure.
The risk aversion may worsen on Friday, fueling deeper losses in NZD/USD, as the Federal Reserve’s balance sheet size is decreasing with the fall in demand for emergency liquidity measures.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.