NZD/USD marks a heavy 50-pip move around April 2018 peak on RBNZ’s status-quo
|- NZD/USD initially snapped five-day losing streak before refreshing the multi-month top.
- RBNZ kept interest rate and LSAP unchanged but cited economic fears.
- S&P 500 Futures print mild losses, US Treasury yields drop following Powell’s mixed clues.
- Vaccine updates, US stimulus gridlock and unlock news offer extra catalysts to watch other than RBNZ’s Orr, Powell Testimony 2.0.
NZD/USD takes the bids near 0.7365, following its drop to 0.7315, after the Reserve Bank of New Zealand’s (RBNZ) rate decision on early Wednesday. While the kiwi pair’s early slump should have considered the fears of economic uncertainty conveyed by the New Zealand central bank, the latest recovery may have senses nothing new challenging the RBNZ status to recall the kiwi bulls.
RBNZ kept the benchmark interest rate unchanged at 0.25% while also holding the LSAP (large-scale asset purchase program) at NZD 100 billion. However, comments like “committee agreed it must remain prepared to provide additional support if necessary,” as well as,” Inflation, employment likely to remain below targets” seemed to have recalled the kiwi bears.
Read: Breaking: RBNZ keeps QE, OCR unchanged
NZD/USD should have been tested over the risk catalysts as market sentiment dwindles following Fed Chair Jerome Powell’s fears of further economic struggle before reaching the inflation and unemployment targets. It should be noted that the US-China and the Washington-Tehran tussles add to the market’s sluggish mood.
However, upbeat vaccine news, recently announced by AstraZeneca, joins further unlocks of the virus-led activities, this time from Japan, seems to favor the risks.
That said, S&P 500 Futures drop 0.20% while the US 10-year Treasury yields decline 2.2 basis points (bps) by press time.
Having witnessed the initial reaction to the RBNZ, NZD/USD traders will keep their eyes on Governor Adrian Orr’s comments, up for publishing in the next one hour, for further details. Should RBNZ’s Orr steps back from his cautious optimism, which is less likely, the pair may have to trim some of its latest gains.
Following that, the second part of Fed Chair Powell’s testimony and updates on the covid vaccines and easing in the virus-led activity restrictions will also be the key to watch.
Technical analysis
January 2021 peak surrounding 0.7315, followed by the 0.7300 round-figure, will challenge the pullback moves if any. Alternatively, April 2018 high near the 0.7400 threshold may lure immediate buyers ahead of directing them to the year 2018 peak close to 0.7445.
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