NZD/USD falls to its lows for the day ahead of European trading
- RBNZ leaves cash rate on hold at 0.25%, expands QE program
- Minutes of the RBNZ meeting just concluded
- RBNZ Gov Orr says monetary policy committee is prepared to do whatever it takes
The key takeaways from the central bank policy decision are that they nearly doubled their QE program while reaffirming that they are prepared to cut its cash rate further if needed, even leaving the option of negative rates on the table.
The latter in particular is something to be wary about as it could be particularly damaging for the kiwi - from a yields perspective, more so than it already has - should the market start to heavily price in such a possibility in the coming months.
NZD/USD sank after a mild whipsaw to 0.6098 all the way down to 0.6000 levels currently. The figure level is holding the drop with some support also seen around 0.5992-94.
Beyond those levels, the trendline support @ 0.5978 will also be one to watch.
Right now, sellers are in control upon the break under the key hourly moving averages as well. The first target of 0.6000 has been met and now we'll have to see if sellers have more conviction to drive price any lower from hereon.
From a technical perspective, a drop under 0.6000 may be an ominous signal of more pain to come with further support only seen closer to 0.5978 and then around 0.5922 next.
Fundamentally, things are also not going too well with the RBNZ leaving negative rates as an option while the Fed has been pushing back against it this week. Fed chair Powell should hammer home that point later in the day as well.
Then, you also have the fact that tensions between US and China have seen risk sentiment sour on the week. That is also a negative factor working against the kiwi, not to mention its own potential relationship problems with China as seen here.
