- NZd has been a strong performer ahead of the RBNZ, however, it is vulnerable to a souring of risk appetite.
- RBNZ to signal a doubling of its QE program.
NZD/USD will be a focus this week as it homes in on the 0.62 handle ahead of the Reserve Bank of New Zealand interest rate decision on Wednesday and the Budget on Thursday.
The pair has continued within its northerly trajectory and it could find support during this week's RBNZ should the central bank confirm its commitment to holding rates steady for at least 12 months. The forward guidance will be crucial. "It could easily go higher – all it would take would be the maintenance of the RBNZ’s “OCR on hold for at least 12 months” guidance. But even if that were to happen, there is more easing coming, a strong TWI is not what we need right now, and the Kiwi is vulnerable to a souring of risk appetite," analysts at ANZ argued.
We expect the RBNZ to signal a doubling of its QE program and unveil a fairly grim set of economic forecasts," analysts at ANZ Bank said. "The Budget will be a much more complicated affair. We anticipate that net government debt will eventually hit 40-50% of GDP, though a relatively optimistic set of growth forecasts would dampen the forecast ratios. See our preview here. Note that at this stage there is no lock-up planned for economists so our analysis will be released later than in previous years."
US unemployment highest rates since the Great Depression
Meanwhile, the US dollar may struggle in a negative environment since Friday's report showing how an eye-watering 20.5 million US workers lost their jobs in April. The unemployment rate has now tripled to 14.7%, the highest rates since the Great Depression.
May is likely to add more job losses regardless of the path of the virus, on top of an April that saw a decade’s worth of job-creation given up. Lower-wage labour in hospitality and retail bore the brunt. The US labour market is very flexible, for good and ill, shedding and adding jobs at a bewildering pace,
the analysts at ANZ explained.
NZD/USD levels
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold reaches to all-time highs near $2,230, US PCE eyed
Gold price appreciates to all-time highs near $2,230 per troy ounce, attempting to continue its winning streak for the fifth successive session on Friday. However, trading volumes are light as market participants are likely observing Good Friday.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.