NZD/USD steadies near mid-0.56s, erases around 1% on the day
|- RBNZ launches new QE of $30 billion to support economy.
- US Dollar Index erases Friday's losses, stays close to 103.
- Market sentiment is likely to continue to drive pair's action on Monday.
The NZD/USD pair erased more than 300 pips last week as worries over a shortage in funding markets boosted the demand for the greenback. At the start of the new week, the pair extended its slide following the Reserve Bank of New Zealand's (RBNZ) announcement before going into a consolidation phase. As of writing, the pair was trading at 0.5647, erasing 1.05% on a daily basis.
During the Asian session on Monday, the RBNZ said that it will start purchasing $30 billion worth of government bonds across the yield curve for the next 12 months.
Commenting on this announcement, “QE will help support the economy and soothe markets that have been dysfunctional," said analysts at ANZ Research. "We believe this package will have an immediate and significant impact on the local bond market.”
Eyes on US politics
On the other hand, the surging number of coronavirus infections and related fatalities globally force investors to continue to seek refuge and make it difficult for the risk-sensitive NZD to show resilience against its rivals. The US Dollar Index, which closed the previous week 3.3% higher, was last up 0.73% on the day at 102.70.
In the absence of significant macroeconomic data releases, the market sentiment is likely to continue to drive the pair's action. In the meantime, investors will be looking to see if the US finally approves a fiscal stimulus package to negate the negative impact of the coronavirus outbreak on the economic activity.
Technical levels to watch for
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.