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  • NZD/USD fails to hold on as he greenback attempts a recovery on strong Manufacturing PMI.
  • Traders now look ahead to the RBNZ Gov. Adrian Orr who will speak on MP at Victoria University of Wellington.

NZD/USD is currently trading at 0.6747 and is higher by 0.21% at the time of writing having travelled between a high of 0.6779 and a low of 0.6727.

The US dollar has firmed at multi-month lows in the DXY at 91.75 as it takes out resistance structure in the 92.20 area scoring a session high of 92.39.

US data saved the day for the dollar bulls with there being a divergence between a flat reading in eurozone PMIs compared to ‘a beat in the US data. 

US ISM Manufacturing PMI for August arrived at 56.0, beating the median forecast of just 54.5. 

The rise in the greenback has taken some of the air out of the commodity complex with the CRB index sliding from the daily highs of 154.49, fuelled by a spike in oil prices.

Meanwhile, having been “out-doved” by the Federal Reserve, the Reserve Bank of New Zealand is likely to up the ante in coming weeks and may jawbone the currency more aggressively. 

RBNZ Orr speech in focus

Today’s speech by RBNZ Governor Orr presents immediate downside risks for the Kiwi for the Asian session ahead where he will discuss the monetary policy response to COVID-19 – during and following the immediate shock at Victoria University of Wellington. 

At its last meeting, the RBNZ raised the prospect of moving to negative rates yet that may not be something that comes to fruition for the immediate future. 

We think they will become a reality by April 2021

analysts at ANZ bank suggested, adding, 

For the NZD, this is not likely to drive a major depreciation. We do not think it will generate a drastic change in its relationship with interest rate spreads. Rather, the move below zero is a part of a policy continuum.

NZD/USD levels

 

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