- NZD/USD recovers Asian session losses to finish the week in the green, tracking strength in AUD.
- Kiwi had been weighed ever so slightly by cautious comments from the Governor of the RBNZ.
NZD tracks strength in Aussie counterpart
NZD has managed to stage a late comeback into positive territory on the day vs its US dollar counterpart. For most of the session, the kiwi had been trading marginally in the red, with seemingly dovish remarks from the RBNZ Governor Adrian Orr during Friday’s Asian session, weighing on the currency ever so slightly.
Speaking to Bloomberg TV, the RBNZ Governor noted that a recently discovered community case of Covid-19 is a reminder of the risks the country faces. “If the economy continued to grow and do what it’s doing, well that’s a beautiful world, but that’s a big if,” said a cautious Orr.
His comments come following this week’s RBNZ Rate Decision, at which the central bank left the OCR rate unchanged at 0.25% (in contrast to the RBA who axed their cash rate to 0.1% from 0.25% the week before), left its QE programme unchanged at NZ$ 100B and, as expected, introduced a new Funding for Lending programme, which analysts estimate will release NZ$ 24B in cheap funding into the New Zealand economy. The bank also noted how the economy had performed better than previously forecast, an acknowledgment that, at the time, spurred strength in NZD and helped markets price out the possibility of negative interest rates in New Zealand in 2021.
Orr’s slightly more cautious tone might well have been aimed at taming the positive NZD reaction to the rate decision earlier in the week; the RBNZ still sees NZD strength as a liability for the economy after all.
However, amid a quiet end to the week for FX markets, his comments broadly have not changed the dial too much for NZD, which has tracked gains in its Aussie counterpart in recent trade amid a gradually softening AUD.
NZD/USD disappoints bulls waiting for a retest of 0.6800
Traders wanting to get long at NZD/USD just ahead of prior 14 September highs at the 0.6800 mark, with stops potentially placed just below 2 September highs at 0.6790, were disappointed on Friday, after the pair put in its low of the day at 0.6811.
To the upside, no notable levels of resistance stand in the way of the NZD/USD and the 0.6900 mark, above which there is Wednesday’s high at 0.6914. Beyond this week’s high, the next notable resistance comes in the form of a double top set back February and March 2019 at just below 0.6940.
NZD/USD additional levels
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