- NZD/USD’s sell-off continues after RBNZ governor Orr’s “whatever it takes” comment.
- The Kiwi has dropped to the 50-day average support.
- RBNZ has asked banks to prepare for negative rates by the end of 2020.
NZD/USD is extending post-RBNZ losses on governor Orr’s dovish comments.
The currency pair is now trading at fresh session lows near 0.6020, representing a 0.80% drop on the day, having dropped from 0.6137 to 0.6030 following the Reserve Bank of New Zealand’s rate decision.
Governor Orr was out the wires a few minutes before press time, stating that the central bank would do whatever it takes to support the economy. Meanwhile, policymaker Bascand said that commercial banks have been asked to prepare for negative rates by the end of the year.
While the central bank kept the official cash rate unchanged at 0.25% early Wednesday, it expanded the bond purchase program to $60 billion from $30 billion. More importantly, the central bank said that negative rates could become an option in the future, validating Westpac’s forecast for below-zero rates by November.
With the RBNZ reinforcing expectations for negative rates, the NZD looks set to suffer deeper declines in the near term.
At press time, the pair is flirting with the 50-day average support at 0.6019. Acceptance below that support would expose the higher low of 0.5994 created on May 7. A close below that level would confirm a bullish-to-bearish trend change.
On the higher side, a close above the trendline connecting Jan. 2 and Mar. 9 highs is needed to put the bulls back into the driver’s seat.