- NZD/USD takes offers after an upbeat performance the previous day.
- New Zealand (NZ) government announces measures to boost housing supply, help first-home buyers and curb investment flows to ease housing prices.
- NZ Westpac Consumer Survey came in better-than-forecast for Q1 2020.
- Market sentiment also dwindles ahead of the key testimony by Fed Chair Powell and Treasury Secretary Yellen.
NZD/USD stands on a slippery ground while taking offers near 0.7135 to refresh intraday low with each drop during the early Asian session on Tuesday. Although the latest pause in the previous risk-on mood favor sellers, the New Zealand government’s efforts to curb housing prices at home seems to have favored the bears off-late.
While trying to tame the rally in housing prices and to stay in the recovery mode, the NZ government announced multiple measures ranging from limiting investment-purpose buying of the homes to boosting the first-time purchases in its latest attempt. Some of the notable steps include allowing the housing agency to borrow NZ$2 billion for land purchases and to boost housing supply and infrastructure with NZ$3.8 billion funds. Also important were efforts to open up the housing sector easy first home grants while also removing tax-deductibility of loan interest for investors. It should be noted that the NZ government had earlier pushed the RBNZ to consider housing policy while making monetary decisions citing it as the challenge to the economy.
Also weighing on the quote could be the shift in the mood as traders turn cautious ahead of the testimony from US Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen over the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). In his prepared remark, Fed Chair Powell said, “The recovery has progressed more quickly than generally expected and looks to be strengthening.” Though, his comments like, “But the recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes,” probe the bulls.
Additionally, comments from the US Centers for Disease Control and Prevention (CDC) and geopolitical tension between the West and China weigh on the sentiment. Dr. Rochelle Walensky, CDC Director, recently warned over “another avoidable surge” of the virus like Europe if mitigation efforts go out the window, per The New York Post. Further, the US, European Union (EU), Canada, and the UK joined hands on Monday, per South China Morning Post (SCMP) to sanction Chinese officials over suspected human rights abuses in Xinjiang.”China hits back with sanctions on 10 European individuals and four entities,” said the news.
Against this backdrop, S&P 500 Futures hesitate to extend Wall Street gains while the US 10-year Treasury yields await fresh clues after favoring the risk-takers the previous day.
It should be noted that NZ Q1 Westpac Consumer Survey rose past-98.4 to 105.2 but failed to impress NZD/USD bulls amid the challenges to the risk-on mood.
Moving on, the kiwi players should wait for NZ Credit Card Spending data for February, prior -10.6% YoY, for fresh impulse. However, the key will be the US policymakers’ testimony in front of Congress wherein the market players seek clues of sustained monetary and fiscal support.
While failures to cross 10-day SMA, currently around 0.7185, directs NZD/USD towards a 100-day SMA level of 0.7125, any further losses will be tamed by 0.7100-7095 horizontal region comprising multiple lows marked since January 18, 2021.