FXStreet (Guatemala) – NZD/USD has continued to drop post the RBNZ and has made fresh lows as we get going in Asia.
NZD/USD dropped 70 pips on the immediate release of the dovish statement after the Central Bank cuts rates by 25bp’s for a third time this year. The next quarter may be a tough one for the economy with poor weather conditions, business conditions and continued lackluster performances in the economy on the back of China’s slowdown and commodity prices.
The RBNZ will also continue to monitor the Chinese Yuan and Auckland’s housing sector very closely while it is too early to know if the market there is cooling. At the same time, the Bank will leave the door open for further, but substantial, rate cuts depending on data. The bird is sighted to weaken further as well and ‘appropriately’ so. The OCR now stands at 2.75% from 3.00% previous.
The RBNZ statement, coupled with a poor performance on Wall Street, leaves the NZD/USD under pressure leading into the Tokyo open. The Nikkei opened -1.9%.
The S&P 500 finished up -1.4% and futures are down 1.27% in early Asia on the back of the sell-off on mounting fears that a Fed hike could come as early as this month. Strong jobs openings reported in the JOLTS data accompanying the positive revisions in the Nonfarm Payrolls. The JOLTS printed 5.753m vs 5.288m expected and 5.322m previous.
NZD/USD bears taking out key support levels
Technically, the bird is finding some support at the mid-point of the 0.62 handle now that it fell through key levels on the way down. 0.6220 comes as next key support and guards territory towards 0.5910. A continuation in the recovery brings some congestion at the upper end ahead of the 0.6500 handle and 27th Aug high at 0.6505.
(Market News Provided by FXstreet)