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NZD/USD breaks under 0.7000 as investors await a 25 bps rate hike by the RBNZ on the next week

  • NZD/USD drops below the figure, amid broad US dollar strength across the board.
  • COVID-19 cases increase in Europe, spurred demand for safe-haven assets.
  • Fed’s Waller and Clarida: Aims for a faster QE pace so that the US central bank could have some space to maneuver.
  • Money market futures have priced in a 25 basis point increase by the RBNZ on its November 24 Monetary Policy Meeting.

The NZD/USD slumps for the third week in a row, trading at 0.6996 during the New York session at the time of writing. Dismal market sentiment in the financial markets spurred demand for safe-haven currencies, like the US dollar, the Japanese yen, and the Swiss franc. Further, major US equity indices fall, except for the tech-heavy Nasdaq 100, gaining 0.56%.

COVID-19 cases increase in Europe, dent the market sentiment

As the weekend looms, a COVID-19 fourth wave in Europe clouds the economic outlook. Higher cases in Eastern Europe threaten that an economic slowdown is around the corner. Austria reimposed coronavirus restrictions, with a lockdown of 20 days for vaccinated and unvaccinated people.  Meanwhile, in Germany, the situation is no better, as some parts of the country closed non-essential business, while the Netherlands has already ordered shops and bars to close early.

Moving back to the NZD/USD pair, the overnight session witnessed a 50-pip drop in just three hours. It broke some pivot-points support levels on its way down, but the move was capped around the 0.6990 area, in the vicinity of Thursday’s low. Further, as market liquidity evaporated as European traders head into the weekend, the pair remains subdued within the 0.6990-0.7020 range.

In the macroeconomic docket, it was light for New Zealand. In the US, Fed speakers crossed the wires.

On Friday, Fed Governor Christopher Waller suggested that the US central bank might double the pace of its QE to $30 billion per month to end by April of 2022. Further added that accelerating the rhythm would give space to the Fed for rate hikes as soon as Q2 of 2022. 

After Walles spoke, Fed’s Vice Chairman Richard Clarida said that it “may very well be appropriate” to discuss accelerating the pace of the bond tapering, in line with other Fed policymakers. Further added that he sees upside risks to inflation and added that the economy is very strong position at that it looks as though Q4 is going to be very good. 

NZD/USD traders’ focus will turn on the New Zealand Retail Sales and the Reserve Bank of New Zealand Monetary Policy Meeting in the upcoming week. Meanwhile, in the US economic docket, Durable Good Orders, GDP for Q3, the Federal Reserve favorite gauge for inflation the PCE and FOMC minutes, would entertain traders.

NZD/USD

Overview
Today last price0.6996
Today Daily Change-0.0047
Today Daily Change %-0.67
Today daily open0.7043
 
Trends
Daily SMA200.711
Daily SMA500.7057
Daily SMA1000.7027
Daily SMA2000.7094
 
Levels
Previous Daily High0.7054
Previous Daily Low0.6993
Previous Weekly High0.7178
Previous Weekly Low0.6997
Previous Monthly High0.7219
Previous Monthly Low0.6876
Daily Fibonacci 38.2%0.7031
Daily Fibonacci 61.8%0.7016
Daily Pivot Point S10.7006
Daily Pivot Point S20.6969
Daily Pivot Point S30.6945
Daily Pivot Point R10.7067
Daily Pivot Point R20.7091
Daily Pivot Point R30.7128

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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