NZD/USD slumps below 0.6900 to refresh nine-month low on RBNZ’s hawkish hold
- NZD/USD extends the heaviest fall since June after the RBNZ Interest Rate Decision.
- RBNZ policymakers left benchmark interest rate unchanged but stay ready for a rate hike.
- Market sentiment dwindles amid virus woes, Fed tapering concerns, NZ reports six new covid cases linked to the first one.
- US dollar pullback awaits FOMC minutes for clearer direction, risk catalysts, Orr's presser are important too.
NZD/USD takes offers around 0.6875, the lowest level in 2021, after the Reserve Bank of New Zealand (RBNZ) disappointed global markets with no rate change during early Wednesday.
In its latest moves, the RBNZ kept the benchmark interest rate unchanged at 0.25% versus the widely expected rate hike of 0.25%. Even so, the New Zealand (NZ) central bank said, “Committee discussed the merits of an increase in the OCR at this meeting and considered the implications of alternative sequencing of ocr changes over time.”
Read: Breaking: RBNZ keeps OCR unchanged at 0.25%, NZD/USD slumps
While reacting to the RBNZ moves, the NZD/USD traders ignore the US Dollar Index (DXY) pullback. That said, the DXY snaps a two-day uptrend while easing from a one-week high to 93.11 by the press time.
While the market sentiment remains pessimistic, led by the coronavirus woes, mixed comments from the US Federal Reserve policymakers seem to pull the DXY back amid a cautious mood ahead of the Federal Open Market Committee (FOMC) Minutes.
It’s worth noting that there are seven cases of the virus in New Zealand versus the previous day’s first reported from Auckland. Elsewhere, Australia’s New South Wales report all-time high covid cases, propelling the national count to the fresh top since August 2020 whereas China’s infection numbers eased at the latest.
Amid these lays, the US 10-year Treasury yields stay firmer around 1.26% but the S&P 500 Futures print mild losses by the press time.
Moving on, covid updates will be the key ahead of the FOMC minutes but the USD moves will be important to follow. It shuld be noted that RBNZ Governor Adrian Orr will hold a press conference soon and the NZD/USD is up for reacting on that too.
Read: FOMC Minutes July Preview: More new questions than answers
Technical analysis
A daily closing beyond 20-DMA, near the 0.7000 threshold, becomes necessary for the NZD/USD corrective pullback, until then, bears can aim for the 0.6900 round figure. If the quote remains weak below 0.6900, the 61.8% Fibonacci retracement of August 2020 to February 2021 upside, close to 0.6860, will be in focus. On the contrary, a descending resistance line from late May, around 0.7040, adds to the upside filters beyond the 20-DMA immediate hurdle.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
