- Business confidence in New Zealand weakened in the third quarter.
- The heavy selling pressure surrounding the AUD also hurts the NZD on Tuesday.
- US Dollar Index stays at fresh multi-year highs above the 99.50 mark.
After closing the first day of the week below the 0.6300 handle, the NZD/USD pair came under renewed bearish pressure during the Asian trading hours and struggled to stage a recovery. At the moment, the pair is trading at its lowest level in more than four years at 0.6215, losing 0.78% on the day.
AUD/USD sell-off drags NZD/USD on Tuesday
The Reserve Bank of Australia (RBA) on Tuesday announced that it cut its policy rate by 25 basis points. Although this decision was expected and largely priced in the markets, the fact that the RBA left the door open for further rate cuts caused the AUD to weaken sharply against its rivals and weighed on the positively-correlated Kiwi as well.
Moreover, the New Zealand Institute of Economic Research’s (NIEZR) Business Confidence Index in the third quarter fell to -35% from -34% to further hurt the NZD.
On the other hand, the poor performance of major European currencies, especially the EUR and the GBP, on Tuesday continues to ramp up the market demand for the Greenback and allows the bearish pressure on the pair to remain intact.
Ahead of the IHS Markit’s and the Institute for Supply Management’s (ISM) Manufacturing PMI reports from the United States, the US Dollar Index is sitting at its highest level since May of 2017 at 99.60, adding 0.21% on a daily basis.
Technical levels to consider
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