NZD/USD flying high on USd weakness despite RBNZ outlook
- The Federal Reserve is on a lower for longer trajectory which has sunk the greenback, lifting the bird.
- The RBNZ is expected to decide upon a negative interest rate regime, but the bird is firm across the board.
NZD/USD is currently trading at 0.6733 and between a low of 0.6727 and a high of 0.6741 in a relatively choppy start to the end of the month.
Ahead o the weekend, the USD bears were fading rallies in the mid-lower end of the 92 handle in the DXY following the Jackson Hole aftermath which helped elevate the bird to fresh COVID-19 era highs.
Considering that high nominal and real dollar rates were the key ingredients behind USD strength in prior years, the fact that the Federal Reserve is sent the prospects of interest rate hikes way over the horizon does not bode well for the greenback.
However, the bird has also made decent gains on most crosses and this is all despite the probable outcome that the Reserve bank of New Zealand will cut rates to negative.
NZ can ill-afford a higher exchange rate, but as we noted Friday, the Fed’s new policy target does neutralise the RBNZ’s threat of negative rates somewhat, and we might have to live with one for a bit longer,
analysts at ANZ Bank argued who noted that the price action is bullish and the suggest the next target as the January 1st high of 0.6756.
Meanwhile, on the coronavirus updates, Auckland has officially moved to Level 2 but still has more restrictions in place than the rest of the country hence why it is referred to as Level 2.5.
NZD/USD levels
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
