- RBNZ Governor Orr’s dovish comments weigh on the NZD.
- USD continues to capitalize on risk-off flows on Tuesday.
- Coming up: Existing Homes Sales data from US and NZ GDT Auction.
The NZD/USD pair broke below the 0.6000 handle during the Asian trading hours and continued to push lower to touch its weakest level in five days at 0.5953. As of writing, the pair was down 1.2% on the day at 0.5960.
Dovish RBNZ commentary hurts NZD
Earlier in the day, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr repeated that the QE was a more effective tool than interest rates to deal with the coronavirus crisis but noted that they were not ruling out negative rates.
Commenting on Orr’s remarks, “Governor Orr stated that negative rates are not ruled out but ‘aren’t the best tool we have’ for the current situation,” said economists at MUFG Bank. “Orr sees negative rates as best for a low, long economic contraction.”
Meanwhile, falling global equity indexes amid plunging crude oil prices show that markets remain risk-averse on Tuesday to put additional weight on the risk-sensitive kiwi’s shoulders.
On the other hand, the greenback continues to gather strength as a safer alternative and allows the bearish pressure on the pair to remain intact. The US Dollar Index was last seen adding 0.3% on a daily basis at 100.25. Later in the day, the only data featured in the US economic docket will be Existing Home Sales. Additionally, the bi-weekly GDT Auction in New Zealand will be looked upon for fresh impetus. Nevertheless, the USD’s performance is likely to continue to impact the pair’s movements.
Technical levels to watch for