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NZD selling continues and it looks precarious against the USD. The market had almost forgotten that just like house prices, the kiwi can go down as well as up and the shock is still filtering through, as reported by ANZ Bank.

Key quotes

“Selling in the wake of Tuesday’s government housing policy announcements continued. The move has been decent and some might call it an over-reaction. 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.”  

“We think a further downward adjustment in OCR expectations is likely over coming days; USD gyrations aside, that speaks to headwinds for the NZD for a little longer.”  

“A break of 0.70 is a bad sign technically – the next support level below 0.70 is miles away.”