The drop in the kiwi today comes after the NZ government has moved to impose curbs on the housing market to ease prices. While this is very much an indirect policy change, they have also previously called on the RBNZ to act on the matter.
The central bank is still some ways off from hiking rates, so perhaps macroprudential measures are the way to go there - in some sense, a more dovish stance.
But again, this is applicable to just one sector/element of the economy.
Nonetheless, there has been some outflow in the kiwi with the dollar keeping firmer so far on the day. The greenback has come back into favour among leveraged funds and this perhaps is another reason for big money to keep that momentum going.
Looking at NZD/USD, the erosion of the technical picture may also be a factor here. The pair is trading down 1% on the day and is breaking a few key support levels now.
Of note, the pair is tracking below the trendline support @ 0.7122, the 100-day moving average (red line) @ 0.7124, the 38.2 retracement level @ 0.7101, and the 18 January low @ 0.7096 as we start to move towards European morning trade.
In particular, the 100-day moving average @ 0.7124 and the 18 January low @ 0.7096 are key levels to watch ahead of the close today.
The pair has not really tracked below the former besides for a brief period in late October last year. But I would argue that there has not really been a firm break below the key level since May last year - when the kiwi was recovering from the March selloff.
As such, breaking below those key levels mentioned above leaves very little room for buyers to make a stand all the way through to 0.7000 next with the 7 and 12 December lows seen in the region of 0.7003-06 as well.