- NZD/USD extends RBNZ-led losses after New Zealand (NZ) budget.
- The budget projects net debt will surge to 53.6% of GDP by 2023.
- Not only US-China tension but the Aussie-Sino trade war also weighs on the Kiwi pair, virus fears are an extra burden.
- A comparatively light economic calendar ahead of China’s April month data dump highlights qualitative catalysts for fresh impetus.
NZD/USD pulls back from three-week low to 0.5980 after New Zealand budget release on early Thursday.
The annual forecast statement predicts net debt will surge to 53.6% of GDP by 2023.
Read: NZ FinMin Robertson: NZ$50 billion COVID-19 response and recovery fund
The RBNZ’s expansion of Quantitative Easing (QE), coupled with the dovish guidance and economic outlook, piled heavy losses on the kiwi pair on Wednesday. The declines gain additional strength amid the currently risk-averse markets based on China’s fight with the US and Australia, New Zealand’s largest customer.
While portraying the risk-tone, US bond yield and stocks in Asia-Pacific register mild losses during the early Thursday.
Further, the Fed policymakers’ efforts, including those from Chairman Jerome Powell, to rule out odds of negative interest rates also weighed on the pair. Though, the latest comments from US President Donald Trump and Treasury Secretary Steve Mnuchin renewed the fears of few more Fed rate cuts.
Additionally, downbeat Aussie employment data act as an extra downer for the pair. Australia’s April month jobs report marked 6.2% Unemployment Rate versus 8.3% forecast while Employment Change dropped to -594.3K against -575K expected.
The kiwi pair traders may now keep eyes on the trade/virus updates for the fresh direction ahead of April month data dump from China, up for publishing at 02:00 GMT on Friday. However, weekly reading of the US Jobless Claims may offer intermediate moves.
Technical analysis
A daily closing below the six-week-old support line, currently around 0.5975, becomes necessary for the bears to aim for April month lows near 0.5910 and 0.5840 respectively. Meanwhile, the previous month's top near 0.6175, as well as 100-day EMA close to 0.6185, could check buyers during the recoveries beyond 0.6000.
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