For the second day in a row, the NZD/USD is under pressure.
After the SOI defined strategic priorities, RBNZ’s Orr expresses cautious confidence.
Wellington lowers the covid alert level, but the travel ban on Australia’s virus woes remains in place.
A lack of important data/events adds to the USD’s strength, dragging down the Kiwi.
The New Zealand dollar is trading lower against the US dollar, down 0.07 percent at an intraday low of 0.7022 heading into Tuesday’s European session. After the Reserve Bank of New Zealand (RBNZ) identified New Zealand’s wellness as the longer-term aim, the kiwi pair dipped the highest in G10 before recovering losses. RBNZ Governor Adrian Orr recently clarified the Statement of Intent (SOI) for the period 2021-2024.
“Economic activity in New Zealand is recovering to pre-COVID-19 levels,” RBNZ’s Orr stated at the Mindful Money Awards in Auckland.
Read: RBNZ’s Orr: New Zealand’s economic activity is recovering to pre-COVID-19 levels
Earlier in the day, the longer-term SOI lauded the RBNZ’s efforts, while Wellington’s reduction of the virus-led warning level to 01 from 02 attempted to entice NZD/USD bulls. The risk-off mentality in Asia-Pacific, however, as well as stable Treasury yields, support US dollar buyers and weigh on the quotation.
Nonetheless, the US dollar index (DXY) consolidates last week’s retreat from the monthly high with a second good day, rising 0.08 percent intraday to 91.95. The coronavirus (COVID-19) strain’s problems in Asia and the UK, combined with confusing signals from US Federal Reserve (Fed) policymakers, have put a safe-haven premium beneath the US dollar.
Stock futures have suffered minor losses as a result of these moves, while Asia-Pacific markets are trading neutral.
Moving on, the RBNZ’s cautious optimism encourages NZD/USD buyers. However, a lack of key data/events and gloomy market mood may continue to push the Kiwi pair lower ahead of Friday’s US Nonfarm Payrolls report. Prior to that, China’s official PMIs, which will be released on Wednesday, may provide intermediate signals.
Even if a downward sloping trend line from June 01 near 0.7080 and the 0.7100 threshold guard the pair’s short-term recovery moves, the NZD/USD pair’s U-turn from the 50-SMA on the four-hour chart around 0.70200 and firmer Momentum line challenge the sellers.
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