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  • NZD/USD stays relatively quiet following Tuesday’s sharp decline.
  • US Dollar Index stays in the positive territory around 92.50.
  • New Zealand government takes action to curb housing prices.

The NZD/USD pair posted its largest one-day decline on Tuesday as it lost more than 150 pips. After touching its lowest level since November at 0.6967 in the early trading hours of the European session, the pair staged a modest rebound and was last seen trading at 0.6987, where it was down 0.24% on a daily basis.

Kiwi suffers losses after government steps in to curb house prices

During the Asian session, the New Zealand government announced that  it will be introducing a new NZD3.8 billion fund to  boost the housing supply with an aim to curb housing prices. This development triggered a heavy NZD selloff.  

Commenting on the market reaction, “the move has been decent and some might call it an over-reaction,” said ANZ analysts. “However, given the role housing plays in shaping the growth outlook, the immediacy of the changes and the surprise removal of tax deductibility on interest, the adjustment seen is warranted given the implications for the OCR.”  

Later in the day, investors will be keeping a close eye on Durable Goods Orders, the IHS Markit’s preliminary Manufacturing and Services PMI reports for March. Ahead of these data releases, the US Dollar Index is up 0.18% on the day at 92.50.

Nevertheless, NZD/USD is unlikely to shake off the fundamentally-driven bearish pressure even if the greenback ends up losing interest in the second half of the day.

Technical levels to watch for