NZD/USD consolidated into the Easter Break, supported on coat tails of AUD

• NZD/USD quiet into the close on Wall Street, Easter break could mean consolidation.
• QE tapering on the cards and to support the antipodeans? 

NZD/USD is currently trading at 0.6013 between a range of 0.5940 and 0.6031 and is up 0.64%, edging lower from the day’s highs in the close of Wall Street. The bird has been riding the strength in the Aussie midweek with the Reserve Bank fo Australia triggering a rally as markets perceived the rhetoric as bullish. As markets wind up for the Easter break, a period of consolidation this juncture is likely on the cards. 

QE has been at the core of the weakness in the antipodeans, but the RBA signalled that it could be on the verge of tapering.”As the reality that they are sinks in, the Antipodeans will be under pressure again but the NZD does have trade and our ‘island nation’ status as supports,” analysts at ANZ Bank argued 

As for the RBNZ, it announced it will provide term funding up to 3 years to NZ Banks via a new Term Lending Facility (TLF). “This is in addition to the Term Auction Facility announced on 20th March. Details are limited so far, but access to the TLF will be linked to the government’s Business Finance Scheme announced last week. The first TLF operation will begin in May,” analysts at TD Securities explained. 

The RBNZ also announced NZ Banks will make no dividend payments for the foreseeable future. There is likely to be growing pressure on Australian banks to at least cut dividend payments. Equity weakness would support flatter curves.”

 

 FOMC minutes ignored

As for the FOMC minutes, markets did not react materially to them as much of the information contained in the minutes was already communicated by Powell and other Fed speakers.

“One noteworthy point is that the Fed discussed an “acute” decline in Treasury liquidity as the reason for their enormous Treasury purchases. This helps explain the Fed’s later decision to remove the size of the purchases and proceed with unlimited buying,” analysts at TD Securities pointed out. 

NZD/USD levels