- NZD/USD keeps marginal gains after RBNZ’s Bascand says bank on a wait-and-watch mode.
- Bank has made no decision to implement negative rates, Bascand said.
- Escalating tensions between China and Australia could cap the upside in NZD/USD.
NZD/USD is currently hovering near 0.6050 and maintaining early gains with the Reserve Bank of New Zealand (RBNZ) policymaker Bascand ruling out negative rates for now.
“The bank has made no decision to buy foreign assets, launch negative rates at this time,” said Bascand, while adding that “they are one of many options available to the committee.”
Bascand also said that the central bank could expand asset purchases further and has asked banks to be ready to transact, deploy negative rates in wholesale markets by year-end.
The central bank held rates unchanged on May 14 and expanded its asset purchase program, as expected. The tone, however, was dovish as the policy statement said that negative rates could be an option in the future. Westpac, one of the big four Aussie banks, and few other analysts expect the RBNZ to cut rates to negative territory in November this year.
While negative interest rates are unlikely to be implemented any time soon, still the NZD may have a tough time picking up a strong upward momentum as tensions between Australia and China are escalating. The latter has slapped tariffs on Australia’s drought-affected barley exporters, reportedly as a payback to Australia for pushing for a coronavirus probe.
Also, the US stock futures are sidelined at press time, indicating that the index may have a tough time extending Monday’s gain on Tuesday. Risk appetite strengthened on Monday, pushing the US dollar lower across the board on Monday as investors cheered the upbeat news concerning further developments on the coronavirus (COVID-19) cure.
Technical levels
Share
