- NZD/USD buoyed by a weaker outlook for the US dollar.
- RBNZ may struggle to achieve its weaker NZD objective.
NZD/USD is currently trading at 0.6636 between a range of 0.6600 and 0.6675 as the bird heads towards the end of the month on a flight path which has surprised the markets.
The Reserve Bank of New Zealand has been the most dovish in the dollar bloc, yet the currency, despite their telegraphed preference for a lower currency, has done all but decline in value.
Last week's positioning data showed a spike in longs and the spot market has responded in kind, rallying from a low of 0.6488 and some 3% higher vs the greenback.
At its last meeting, the RBNZ raised the prospect of moving to negative rates.
Fed’s actions do neutralise the RBNZ’s actions
However, for the time being, there has been a material shift of focus on the US dollar in the lead into this week's key-note speech from the Federal Reserve's Jerome Powell at the Jackson Hole.
Considering the RBNZ is unlikely to make a move to lower rates until some time of next year, (analysts at ANZ bank predicting not until by April 2021), with the Fed telegraphing a 'lower for longer' message and the greenback in supply, the bird has found its wings on that.
However, local factors still matter for the NZD and a continued bid in the currency will be frustrating for the RBNZ.
While it is clear the RBNZ wants the NZD lower, it will craft policy to try to achieve that goal, but the Fed’s actions do neutralise the RBNZ’s actions somewhat, and it will support risk appetite,
analysts at ANZ Bank explained.
NZDUSD levels
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