News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The S&P 500, Dow Jones and DAX 30 could be at risk of falling as retail traders continue increasing their upside exposure in these indices. What are the key technical levels to watch for? Find out from @ddubrovskyFX here:https://t.co/OJByiwIppr https://t.co/P1iOONG90N
  • The US Dollar continues to hold its ground against most ASEAN currencies as recent downtrends lose momentum. What is the road ahead for USD/SGD, USD/THB, USD/PHP and USD/IDR? Find out from @ddubrovskyFX here:https://t.co/UcleaZEAaW https://t.co/62bGLvt8fE
  • The Canadian Dollar has been caught in broad ranges against the Euro and the US Dollar, but can the upside bias in USD/CAD and EUR/CAD prolong? Find out here:https://t.co/8DubboXsjv https://t.co/A0sIYo2iP1
  • Want to hear my thoughts on the US Dollar? Check out yesterday's recording with #AuzBiz hosted by @KaraOrdway on 'The Trade' We discussed a #USD index, Treasury yields, $USDJPY, $AUDUSD and $NZDUSD https://t.co/yxwquL1btp https://t.co/RtWjlN6kpv
  • Gold has plunged nearly 5% off the Monthly high with the sell-off now probing key weekly support here at 1738/47- looking for a pivot here with the Fed interest rate decision on tap. Get your $XAUUSD market update from @MBForex here:https://t.co/Vnxi41lETt https://t.co/FyZuHNzsU3
  • Feels like the market has been front-running next week’s FOMC announcement, which will reveal updated dot plot projections. Expectations clearly set for a more hawkish shift in guidance. That said, if the Fed does not deliver, US Dollar bulls could be disappointed. $USD $DXY https://t.co/o2v6ibac3L
  • USD/CAD has been chopping around the past week-and-a-half, offering virtually no cues on its next direction. Get your market update from @PaulRobinsonFX here:https://t.co/eq1YkOa3mC https://t.co/V6h8BjyeGa
  • FDA panel votes 16-3 against approving Covid-19 booster shots - BBG
  • RT @C_Barraud: 🇺🇸 Americans Haven’t Been This Down on #Housing Market Since 1982 - Bloomberg *Link: https://t.co/wWFnbAwIDO https://t.co/6G…
  • US Dollar Price Action Setups Pre-FOMC: EUR/USD, GBP/USD, USD/CAD https://www.dailyfx.com/forex/analyst_picks/todays_picks/james_stanley/2021/09/17/US-Dollar-Price-Action-Setups-pre-FOMC-EURUSD-EUR-USD-GBP-USD-GBPUSD-USD-CAD-USDCAD.html https://t.co/J25MYsXCa9
Japanese Yen Surges vs New Zealand Dollar After RBNZ, Fed Rate Cuts

Japanese Yen Surges vs New Zealand Dollar After RBNZ, Fed Rate Cuts

Dimitri Zabelin, Analyst

New Zealand Dollar, Japanese Yen, RBNZ, FOMC, Fed Cuts Rates to Zero, QE – TALKING POINTS

  • Japanese Yen surges vs New Zealand Dollar after RBNZ slashed interest rates
  • NZD/JPY selloff amplified after Fed cut interest rates to zero and launched QE
  • New Zealand Dollar may continue to suffer vs Japanese Yen on Covid-19 panic

RESERVE BANK OF NEW ZEALAND CUT INTEREST RATES

The cycle-sensitive New Zealand Dollar plunged against its G10 counterparts but with particular ferocity vs the anti-risk Japanese Yen. This came after the Reserve Bank of New Zealand (RBNZ) delivered an emergency 75 basis point rate cut over the weekend amid the coronavirus pandemic. This caught markets off-guard who were previously believed the central bank would take a more wait-and-see approach to policy.

These stimulus measures brought the Overnight Cash Rate (OCR) to an all-time low at 0.25 percent in an effort mitigate the economic disruption of Covid-19. New Zealand’s economy is particularly susceptible to global disruptions due to its export-oriented growth model. This vulnerability is amplified by the fact that China – the epicenter of the coronavirus outbreak – is also a leading source of New Zealand’s external demand.

FEDERAL RESERVE CUTS RATES TO ZERO, IMPLEMENTS QE

As outlined in my prior piece, Federal Reserve announced on Sunday that it cut the benchmark Fed Funds interest rate to 0.00-0.25 percent. Additionally, monetary authorities announced a $700 billion quantitative easing program (QE) as a way to calm interbank stress with an objective of financial re-stabilization. Fed Chairman Jerome Powell subsequently held an audio-only press conference to expand on the decision.

In the call, he warned that the coronavirus is having a profound impact on people all over the world. The measures taken by schools and businesses to mitigate the contagion are likely to negatively impact the US economy in the near term and will hit vulnerable industries like tourism and travel the hardest. Mr. Powell also noted that financial markets have shown signs of stress and tightened credit conditions amid a panic-induced selloff.

He said the bond purchasing program will foster more accommodative financial conditions alongside its coordinated effort to reduce the cost of US Dollar swap lines with major central banks. When questioned on negative interest rates, the Chair said he does not see sub-zero interest rates as an appropriate policy here in the US. He also noted that the FOMC will not hold its planned meeting this week on Wednesday.

To see more of his comments, be sure to follow me on Twitter @ZabelinDimitri.

NZD/JPY ANALYSIS

Despite the proverbial bazooka of easing Mr. Powell fired into the markets, risk aversion gripped investors and amplified NZD/JPY’s losses. The pair is currently trading at a four-year low as part of a broad selloff it faced after it broke the October uptrend earlier this year (red parallel channel). NZD/JPY is now hovering in a support range between 63.630 and 64.216 (gold-dotted lines).

NZD/JPY – Daily Chart

Chart showing NZD/JPY

NZD/JPY chart created using TradingView

If the lower tier is broken with follow-through, it could further pressure the pair as it continues to trade below a five-year descending resistance channel. The monthly chart shows NZD/JPY has attempted but failed to clear the ceiling on several occasions and is now heading for a range not reached since 2008. Selling pressure here may abate, but given the fundamental circumstances, the path of least resistance leads downward.

NZD/JPY – Monthly Chart

Chart showing NZD/JPY

NZD/JPY chart created using TradingView

NEW ZEALAND DOLLAR TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES