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.

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
EUR/USD
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
Oil - US Crude
Bullish
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
Wall Street
Mixed
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
Gold
Bullish
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
GBP/USD
Bullish
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
USD/JPY
Mixed
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
  • Hey traders! Get your market highlights from @DailyFX Chief Strategist @JohnKicklighter. What are some charts and themes we are wrapping up with today? Find out 👇 https://t.co/HOGohRF7tD
  • Texas virus cases increase 4.7% vs prior 4.2% 7-day average - BBG
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.51% 🇨🇦CAD: 0.17% 🇦🇺AUD: 0.16% 🇯🇵JPY: -0.03% 🇬🇧GBP: -0.05% 🇪🇺EUR: -0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/9dkCjQChjR
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Gold: 0.32% Silver: -0.26% Oil - US Crude: -0.74% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/WNWW8VibD8
  • Texas Governor mandates face masks in public by executive order
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.35%, while traders in Germany 30 are at opposite extremes with 71.50%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/BbKn9Fy1J4
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Wall Street: -0.01% US 500: -0.01% FTSE 100: -0.07% Germany 30: -0.33% France 40: -0.40% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/t3i9BGnGv3
  • Fauci says U.S. still 'knee-deep' in first wave of COVID-19 - BBG
  • Senator Thune says next round of stimulus realistically coming by August break, GOP split over second round of direct payments - BBG
  • Wirecard’s fall from grace has left shareholders reeling as price plunged and market capitalization evaporated. Get your #DAX market update from @PeterHanksFX here: https://t.co/Iz73sfgaNM https://t.co/eNacAtGllr
New Zealand Dollar Dips Lower on Dovish RBNZ Forward Guidance

New Zealand Dollar Dips Lower on Dovish RBNZ Forward Guidance

2020-06-24 02:30:00
Daniel Moss,
Share:

RBNZ, Interest Rate Decision, NZD/USD – Talking Points:

  • NZD plunged on dovish forward guidance from the Reserve Bank of New Zealand
  • RBNZ remains “prepared to provide additional stimulus as necessary”
  • US-China trade tensions may continue to dictate the NZD/USD exchange rate

The New Zealand Dollar plunged 0.8% after the RBNZ said it remains “prepared to provide additional stimulus as necessary”. Keeping the official cash rate (OCR) steady at 0.25%, the committee maintained “the balance of economic risks remains to the downside”.

As the central bank “continues to prepare for the use of additional monetary policy tools”, uncertainty remains as to “whether the monetary stimulus delivered to date is sufficient to meet its mandate”.

Highlighting the “further pressure on export earnings” due to the recent “appreciation of New Zealand’s exchange rate” suggests the RBNZ may be considering future currency intervention, in combination with an expansion of the $60 billion Large Scale Asset Purchase (LSAP) programme, to continue to support the economic recovery.

Looking forward, the central bank “will outline the outlook for the LSAP programme” and “our readiness to deploy alternative monetary policy tools in our August statement”, with the implementation of yield curve control and negative interest rates remaining viable possibilities.

New Zealand Dollar Dips Lower on Dovish RBNZ Forward Guidance

NZD/USD chart created using TradingView

Tourism to Drag on Economic Recovery

The Organization for Economic Co-operation and Development (OECD) commended New Zealand’s “swift and decisive response” to COVID-19, in their half-yearly economic outlook report released in June, as the island nation “successfully contained the virus outbreak, saving lives and allowing the economy to reopen faster”.

However, these “strict containment measures” came at a cost for the local economy, as gross domestic product (GDP) is “projected to shrink by nearly 9% in 2020 and only return to the pre-crisis level by the end of 2021”.

New Zealand Dollar Dips Lower on Dovish RBNZ Forward Guidance

Source – Organization for Economic Co-operation and Development (OECD)

Although New Zealand’s success in suppressing the virus resulted in the easing of all coronavirus restrictions on June 8, Prime Minister Jacinda Ardern urged “now is not the right time” to be “more liberal at the borders”, after a lapse in quarantine protocols resulted in a resurgence of new cases.

With the tourism industry accounting for “about 10% of GDP and 20% of exports in 2019”, and the local border “likely to remain closed to foreign visitors until at least early 2021”, the headwinds facing the economic recovery remain immense.

New Zealand Tourist Arrivals

New Zealand Dollar Dips Lower on Dovish RBNZ Forward Guidance

Source – Trading Economics

The announcement of a possible ‘Trans-Tasman’ travel bubble, allowing Australians and New Zealanders to travel freely between the two countries, could provide a much-needed boost to the service-based economy.

However, the recent surge of coronavirus cases in Victoria may jeopardise the implementation of this much desired scheme and could see some of the sting taken out of the New Zealand Dollar’s three-month rally.

Sentiment to Dictate NZD Future

The sensitivity of the New Zealand Dollar to US-China trade headlines was highlighted yesterday, as the risk-associated currency plunged in response to comments from White House trade adviser, Peter Navarro, suggesting the ‘phase 1’ agreement signed in January was ‘over’.

Although this collapse proved to be short-lived, as Navarro stressed his words had “been taken wildly out of context”, it exemplifies the influence the relationship between the world’s two largest economies has on risk assets in general.

Focus will remain on the development of this relationship, with further escalation possibly fueling a decline in the trade-sensitive currency.

New Zealand Dollar Dips Lower on Dovish RBNZ Forward Guidance

NZD/USD chart created using TradingView

-- Written by Daniel Moss

Follow me on Twitter @DanielGMoss

Traits of Successful Traders
Traits of Successful Traders
Recommended by Daniel Moss
Traits of Successful Traders
Get My Guide

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

DISCLOSURES

News & Analysis at your fingertips.